Correlation Between BII Railway and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both BII Railway and Sunstone Hotel 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 BII Railway and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Sunstone Hotel Investors, you can compare the effects of market volatilities on BII Railway and Sunstone Hotel 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 BII Railway with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Sunstone Hotel.
Diversification Opportunities for BII Railway and Sunstone Hotel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BII and Sunstone is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors and BII Railway 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 BII Railway Transportation are associated (or correlated) with Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of BII Railway i.e., BII Railway and Sunstone Hotel go up and down completely randomly.
Pair Corralation between BII Railway and Sunstone Hotel
Assuming the 90 days horizon BII Railway is expected to generate 1.96 times less return on investment than Sunstone Hotel. In addition to that, BII Railway is 2.21 times more volatile than Sunstone Hotel Investors. It trades about 0.0 of its total potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.02 per unit of volatility. If you would invest 923.00 in Sunstone Hotel Investors on September 3, 2024 and sell it today you would earn a total of 77.00 from holding Sunstone Hotel Investors or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Sunstone Hotel Investors
Performance |
| Timeline |
| BII Railway Transpor |
| Sunstone Hotel Investors |
BII Railway and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Sunstone Hotel
The main advantage of trading using opposite BII Railway and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Sunstone Hotel 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 Sunstone Hotel will offset losses from the drop in Sunstone Hotel's long position.| BII Railway vs. Entravision Communications | BII Railway vs. Consolidated Communications Holdings | BII Railway vs. Chunghwa Telecom Co | BII Railway vs. Verizon Communications |
| Sunstone Hotel vs. Transport International Holdings | Sunstone Hotel vs. Transportadora de Gas | Sunstone Hotel vs. IMPERIAL TOBACCO | Sunstone Hotel vs. BII Railway Transportation |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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