Correlation Between Sun Lif and Kelt Exploration

Can any of the company-specific risk be diversified away by investing in both Sun Lif and Kelt Exploration at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sun Lif and Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Lif Non and Kelt Exploration, you can compare the effects of market volatilities on Sun Lif and Kelt Exploration and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sun Lif with a short position of Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Lif and Kelt Exploration.

Diversification Opportunities for Sun Lif and Kelt Exploration

-0.08

Correlation Coefficient

Sun Lif  Kelt Exploration

Good diversification

The 3 months correlation between Sun and Kelt is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sun Lif Non and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration and Sun Lif is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sun Lif Non are associated (or correlated) with Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Sun Lif i.e., Sun Lif and Kelt Exploration go up and down completely randomly.

Pair Corralation between Sun Lif and Kelt Exploration

Assuming the 90 days trading horizon Sun Lif Non is expected to generate 0.63 times more return on investment than Kelt Exploration. However, Sun Lif Non is 1.59 times less risky than Kelt Exploration. It trades about 0.09 of its potential returns per unit of risk. Kelt Exploration is currently generating about 0.0 per unit of risk. If you would invest  1,909  in Sun Lif Non on December 29, 2024 and sell it today you would earn a total of  136.00  from holding Sun Lif Non or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sun Lif Non  vs.  Kelt Exploration

Sun Lif Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Lif Non are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Sun Lif may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kelt Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kelt Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Kelt Exploration is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sun Lif and Kelt Exploration

The main advantage of trading using opposite Sun Lif and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Lif position performs unexpectedly, Kelt Exploration can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kelt Exploration will offset losses from the drop in Kelt Exploration's long position.

The idea behind Sun Lif Non and Kelt Exploration pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.