Correlation Between Sun Life and INPOST SA

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

Diversification Opportunities for Sun Life and INPOST SA

-0.54

Correlation Coefficient

Sun Life  INPOST SA

Excellent diversification

The 3 months correlation between Sun and INPOST is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and INPOST SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INPOST SA EO 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 INPOST SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INPOST SA EO has no effect on the direction of Sun Life i.e., Sun Life and INPOST SA go up and down completely randomly.

Pair Corralation between Sun Life and INPOST SA

Assuming the 90 days horizon Sun Life is expected to generate 1.54 times less return on investment than INPOST SA. But when comparing it to its historical volatility, Sun Life Financial is 1.92 times less risky than INPOST SA. It trades about 0.1 of its potential returns per unit of risk. INPOST SA EO is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,084  in INPOST SA EO on September 23, 2024 and sell it today you would earn a total of  521.00  from holding INPOST SA EO or generate 48.06% return on investment over 90 days.

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

Sun Life Financial  vs.  INPOST SA EO

Sun Life Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

INPOST SA EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INPOST SA EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INPOST SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sun Life and INPOST SA

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

The idea behind Sun Life Financial and INPOST SA EO 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 Managers module to screen money managers from public funds and ETFs managed around the world.