Correlation Between CIM FINANCIAL and SUN

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

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

Diversification Opportunities for CIM FINANCIAL and SUN

0.28

Correlation Coefficient

CIM FINANCIAL  SUN

Modest diversification

The 3 months correlation between CIM and SUN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CIM FINANCIAL SERVICES and SUN LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN LIMITED and CIM FINANCIAL 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 CIM FINANCIAL SERVICES are associated (or correlated) with SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN LIMITED has no effect on the direction of CIM FINANCIAL i.e., CIM FINANCIAL and SUN go up and down completely randomly.

Pair Corralation between CIM FINANCIAL and SUN

Assuming the 90 days trading horizon CIM FINANCIAL SERVICES is expected to generate 0.24 times more return on investment than SUN. However, CIM FINANCIAL SERVICES is 4.17 times less risky than SUN. It trades about 0.12 of its potential returns per unit of risk. SUN LIMITED is currently generating about -0.05 per unit of risk. If you would invest  1,150  in CIM FINANCIAL SERVICES on September 18, 2024 and sell it today you would earn a total of  110.00  from holding CIM FINANCIAL SERVICES or generate 9.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CIM FINANCIAL SERVICES  vs.  SUN LIMITED

CIM FINANCIAL SERVICES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIM FINANCIAL SERVICES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, CIM FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with CIM FINANCIAL and SUN

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

The idea behind CIM FINANCIAL SERVICES and SUN LIMITED 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..