Correlation Between Sun Life and OS Therapies

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

Diversification Opportunities for Sun Life and OS Therapies

-0.21

Correlation Coefficient

Sun Life  OS Therapies

Very good diversification

The 3 months correlation between Sun and OSTX is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and OS Therapies Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OS Therapies 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 OS Therapies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OS Therapies has no effect on the direction of Sun Life i.e., Sun Life and OS Therapies go up and down completely randomly.

Pair Corralation between Sun Life and OS Therapies

Considering the 90-day investment horizon Sun Life is expected to generate 13.78 times less return on investment than OS Therapies. But when comparing it to its historical volatility, Sun Life Financial is 11.64 times less risky than OS Therapies. It trades about 0.08 of its potential returns per unit of risk. OS Therapies Incorporated is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  251.00  in OS Therapies Incorporated on October 5, 2024 and sell it today you would earn a total of  167.00  from holding OS Therapies Incorporated or generate 66.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	43.15%
Values	Daily Returns

Sun Life Financial  vs.  OS Therapies Incorporated

Sun Life Financial

Risk-Adjusted Performance

5 of 100

Insignificant

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.

OS Therapies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OS Therapies Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, OS Therapies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and OS Therapies

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

The idea behind Sun Life Financial and OS Therapies Incorporated 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.