Correlation Between Sun Life and Himalaya Shipping

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Can any of the company-specific risk be diversified away by investing in both Sun Life and Himalaya Shipping 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 Life and Himalaya Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and Himalaya Shipping, you can compare the effects of market volatilities on Sun Life and Himalaya Shipping 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 Life with a short position of Himalaya Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Himalaya Shipping.

Diversification Opportunities for Sun Life and Himalaya Shipping

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sun and Himalaya is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Himalaya Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himalaya Shipping and Sun Life 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 Life Financial are associated (or correlated) with Himalaya Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himalaya Shipping has no effect on the direction of Sun Life i.e., Sun Life and Himalaya Shipping go up and down completely randomly.

Pair Corralation between Sun Life and Himalaya Shipping

Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.36 times more return on investment than Himalaya Shipping. However, Sun Life Financial is 2.76 times less risky than Himalaya Shipping. It trades about 0.06 of its potential returns per unit of risk. Himalaya Shipping is currently generating about 0.01 per unit of risk. If you would invest  4,712  in Sun Life Financial on October 3, 2024 and sell it today you would earn a total of  1,222  from holding Sun Life Financial or generate 25.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sun Life Financial  vs.  Himalaya Shipping

 Performance 
       Timeline  
Sun Life Financial 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Sun Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Himalaya Shipping 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Himalaya Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sun Life and Himalaya Shipping Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sun Life and Himalaya Shipping

The main advantage of trading using opposite Sun Life and Himalaya Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Himalaya Shipping 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 Himalaya Shipping will offset losses from the drop in Himalaya Shipping's long position.
The idea behind Sun Life Financial and Himalaya Shipping 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.
Check out your portfolio center.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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