Correlation Between Sun Life and Kingsgate Consolidated

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

Diversification Opportunities for Sun Life and Kingsgate Consolidated

-0.78

Correlation Coefficient

Sun Life  Kingsgate Consolidated

Pay attention - limited upside

The 3 months correlation between Sun and Kingsgate is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Kingsgate Consolidated Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsgate Consolidated 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 Kingsgate Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsgate Consolidated has no effect on the direction of Sun Life i.e., Sun Life and Kingsgate Consolidated go up and down completely randomly.

Pair Corralation between Sun Life and Kingsgate Consolidated

Considering the 90-day investment horizon Sun Life Financial is expected to under-perform the Kingsgate Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Sun Life Financial is 1.73 times less risky than Kingsgate Consolidated. The stock trades about -0.04 of its potential returns per unit of risk. The Kingsgate Consolidated Limited is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Kingsgate Consolidated Limited on February 6, 2024 and sell it today you would earn a total of  8.00  from holding Kingsgate Consolidated Limited or generate 8.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Sun Life Financial  vs.  Kingsgate Consolidated Limited

Sun Life Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Life Financial are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Kingsgate Consolidated

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsgate Consolidated Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Kingsgate Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Life and Kingsgate Consolidated

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

The idea behind Sun Life Financial and Kingsgate Consolidated 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.