Correlation Between China Vanke and Sun Hung
Can any of the company-specific risk be diversified away by investing in both China Vanke 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 China Vanke and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Vanke Co and Sun Hung Kai, you can compare the effects of market volatilities on China Vanke 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 China Vanke with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Vanke and Sun Hung.
Diversification Opportunities for China Vanke and Sun Hung
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Sun is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding China Vanke Co 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 China Vanke 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 China Vanke Co 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 China Vanke i.e., China Vanke and Sun Hung go up and down completely randomly.
Pair Corralation between China Vanke and Sun Hung
Assuming the 90 days horizon China Vanke Co is expected to under-perform the Sun Hung. In addition to that, China Vanke is 6.31 times more volatile than Sun Hung Kai. It trades about -0.07 of its total potential returns per unit of risk. Sun Hung Kai is currently generating about -0.24 per unit of volatility. If you would invest 1,067 in Sun Hung Kai on August 28, 2024 and sell it today you would lose (82.00) from holding Sun Hung Kai or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Vanke Co vs. Sun Hung Kai
Performance |
| Timeline |
| China Vanke |
| Sun Hung Kai |
China Vanke and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Vanke and Sun Hung
The main advantage of trading using opposite China Vanke and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Vanke 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.The idea behind China Vanke Co and Sun Hung Kai 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.| Sun Hung vs. Hong Kong Land | Sun Hung vs. Wharf Holdings | Sun Hung vs. Holiday Island Holdings | Sun Hung vs. Bayport International Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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