Correlation Between SUN and NATIONAL INVESTMENT

Can any of the company-specific risk be diversified away by investing in both SUN and NATIONAL INVESTMENT 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 and NATIONAL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SUN LIMITED and NATIONAL INVESTMENT TRUST, you can compare the effects of market volatilities on SUN and NATIONAL INVESTMENT 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 with a short position of NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUN and NATIONAL INVESTMENT.

Diversification Opportunities for SUN and NATIONAL INVESTMENT

0.0

Correlation Coefficient

SUN  NATIONAL INVESTMENT

Pay attention - limited upside

The 3 months correlation between SUN and NATIONAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SUN LIMITED and NATIONAL INVESTMENT TRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT TRUST and SUN 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 LIMITED are associated (or correlated) with NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT TRUST has no effect on the direction of SUN i.e., SUN and NATIONAL INVESTMENT go up and down completely randomly.

Pair Corralation between SUN and NATIONAL INVESTMENT

Assuming the 90 days trading horizon SUN LIMITED is expected to generate 0.32 times more return on investment than NATIONAL INVESTMENT. However, SUN LIMITED is 3.15 times less risky than NATIONAL INVESTMENT. It trades about 0.2 of its potential returns per unit of risk. NATIONAL INVESTMENT TRUST is currently generating about -0.05 per unit of risk. If you would invest  3,850  in SUN LIMITED on September 26, 2024 and sell it today you would earn a total of  170.00  from holding SUN LIMITED or generate 4.42% return on investment over 90 days.

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

SUN LIMITED  vs.  NATIONAL INVESTMENT TRUST

SUN LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUN LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, NATIONAL INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SUN and NATIONAL INVESTMENT

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

The idea behind SUN LIMITED and NATIONAL INVESTMENT TRUST 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.