Correlation Between Sunway Construction and Homeritz Bhd
Can any of the company-specific risk be diversified away by investing in both Sunway Construction and Homeritz Bhd 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 Sunway Construction and Homeritz Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunway Construction Group and Homeritz Bhd, you can compare the effects of market volatilities on Sunway Construction and Homeritz Bhd 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 Sunway Construction with a short position of Homeritz Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunway Construction and Homeritz Bhd.
Diversification Opportunities for Sunway Construction and Homeritz Bhd
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sunway and Homeritz is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sunway Construction Group and Homeritz Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeritz Bhd and Sunway Construction 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 Sunway Construction Group are associated (or correlated) with Homeritz Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeritz Bhd has no effect on the direction of Sunway Construction i.e., Sunway Construction and Homeritz Bhd go up and down completely randomly.
Pair Corralation between Sunway Construction and Homeritz Bhd
Assuming the 90 days trading horizon Sunway Construction Group is expected to generate 1.63 times more return on investment than Homeritz Bhd. However, Sunway Construction is 1.63 times more volatile than Homeritz Bhd. It trades about 0.16 of its potential returns per unit of risk. Homeritz Bhd is currently generating about 0.04 per unit of risk. If you would invest 186.00 in Sunway Construction Group on September 4, 2024 and sell it today you would earn a total of 267.00 from holding Sunway Construction Group or generate 143.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunway Construction Group vs. Homeritz Bhd
Performance |
| Timeline |
| Sunway Construction |
| Homeritz Bhd |
Sunway Construction and Homeritz Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunway Construction and Homeritz Bhd
The main advantage of trading using opposite Sunway Construction and Homeritz Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunway Construction position performs unexpectedly, Homeritz Bhd 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 Homeritz Bhd will offset losses from the drop in Homeritz Bhd's long position.| Sunway Construction vs. Pesona Metro Holdings | Sunway Construction vs. Ho Hup Construction | Sunway Construction vs. Central Industrial Corp |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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