Correlation Between ZKH Group and Sun Life

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

By analyzing existing cross correlation between ZKH Group Limited and Sun Life Financial, you can compare the effects of market volatilities on ZKH Group and Sun Life 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 ZKH Group with a short position of Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKH Group and Sun Life.

Diversification Opportunities for ZKH Group and Sun Life

-0.11

Correlation Coefficient

ZKH Group  Sun Life

Good diversification

The 3 months correlation between ZKH and Sun is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding ZKH Group Limited and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial and ZKH Group 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 ZKH Group Limited are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of ZKH Group i.e., ZKH Group and Sun Life go up and down completely randomly.

Pair Corralation between ZKH Group and Sun Life

Considering the 90-day investment horizon ZKH Group Limited is expected to generate 1.84 times more return on investment than Sun Life. However, ZKH Group is 1.84 times more volatile than Sun Life Financial. It trades about 0.03 of its potential returns per unit of risk. Sun Life Financial is currently generating about -0.08 per unit of risk. If you would invest  356.00  in ZKH Group Limited on December 16, 2024 and sell it today you would earn a total of  11.00  from holding ZKH Group Limited or generate 3.09% return on investment over 90 days.

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

ZKH Group Limited  vs.  Sun Life Financial

ZKH Group Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZKH Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, ZKH Group is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Sun Life Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Life Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ZKH Group and Sun Life

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

The idea behind ZKH Group Limited and Sun Life Financial 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.