Correlation Between Bayport International and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Bayport International and Sun Hung 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 Bayport International and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayport International Holdings and Sun Hung Kai, you can compare the effects of market volatilities on Bayport International and Sun Hung 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 Bayport International with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayport International and Sun Hung.
Diversification Opportunities for Bayport International and Sun Hung
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bayport and Sun is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bayport International Holdings and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai and Bayport International 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 Bayport International Holdings are associated (or correlated) with Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of Bayport International i.e., Bayport International and Sun Hung go up and down completely randomly.
Pair Corralation between Bayport International and Sun Hung
Given the investment horizon of 90 days Bayport International Holdings is expected to under-perform the Sun Hung. In addition to that, Bayport International is 1.62 times more volatile than Sun Hung Kai. It trades about -0.09 of its total potential returns per unit of risk. Sun Hung Kai is currently generating about 0.02 per unit of volatility. If you would invest 1,022 in Sun Hung Kai on August 31, 2024 and sell it today you would lose (2.00) from holding Sun Hung Kai or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Bayport International Holdings vs. Sun Hung Kai
Performance |
| Timeline |
| Bayport International |
| Sun Hung Kai |
Bayport International and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayport International and Sun Hung
The main advantage of trading using opposite Bayport International and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayport International position performs unexpectedly, Sun Hung 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 Hung will offset losses from the drop in Sun Hung's long position.| Bayport International vs. HUMANA INC | Bayport International vs. SCOR PK | Bayport International vs. Aquagold International | Bayport International vs. Thrivent High Yield |
| Sun Hung vs. HUMANA INC | Sun Hung vs. SCOR PK | Sun Hung vs. Aquagold International | Sun Hung vs. Thrivent High Yield |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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