Correlation Between Sun Life and Ihuman

Can any of the company-specific risk be diversified away by investing in both Sun Life and Ihuman 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 Ihuman 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 Ihuman Inc, you can compare the effects of market volatilities on Sun Life and Ihuman 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 Ihuman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Ihuman.

Diversification Opportunities for Sun Life and Ihuman

-0.32

Correlation Coefficient

Sun Life  Ihuman

Very good diversification

The 3 months correlation between Sun and Ihuman is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Ihuman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ihuman Inc 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 Ihuman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ihuman Inc has no effect on the direction of Sun Life i.e., Sun Life and Ihuman go up and down completely randomly.

Pair Corralation between Sun Life and Ihuman

Considering the 90-day investment horizon Sun Life Financial is expected to generate 0.25 times more return on investment than Ihuman. However, Sun Life Financial is 3.97 times less risky than Ihuman. It trades about 0.07 of its potential returns per unit of risk. Ihuman Inc is currently generating about 0.0 per unit of risk. If you would invest  4,254  in Sun Life Financial on September 16, 2024 and sell it today you would earn a total of  1,759  from holding Sun Life Financial or generate 41.35% return on investment over 90 days.

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

Sun Life Financial  vs.  Ihuman Inc

Sun Life Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ihuman Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ihuman Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Ihuman demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Ihuman

The main advantage of trading using opposite Sun Life and Ihuman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Ihuman 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 Ihuman will offset losses from the drop in Ihuman's long position.

The idea behind Sun Life Financial and Ihuman Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.