Correlation Between China Resources and Sun Hung
Can any of the company-specific risk be diversified away by investing in both China Resources 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 Resources 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 Resources Land and Sun Hung Kai, you can compare the effects of market volatilities on China Resources 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 Resources with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Sun Hung.
Diversification Opportunities for China Resources and Sun Hung
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Sun is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land 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 Resources 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 Resources Land 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 Resources i.e., China Resources and Sun Hung go up and down completely randomly.
Pair Corralation between China Resources and Sun Hung
Assuming the 90 days horizon China Resources Land is expected to generate 1.25 times more return on investment than Sun Hung. However, China Resources is 1.25 times more volatile than Sun Hung Kai. It trades about 0.01 of its potential returns per unit of risk. Sun Hung Kai is currently generating about 0.0 per unit of risk. If you would invest 4,398 in China Resources Land on August 28, 2024 and sell it today you would lose (1,360) from holding China Resources Land or give up 30.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 82.14% |
| Values | Daily Returns |
China Resources Land vs. Sun Hung Kai
Performance |
| Timeline |
| China Resources Land |
| Sun Hung Kai |
China Resources and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Sun Hung
The main advantage of trading using opposite China Resources and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources 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.| China Resources vs. China Overseas Land | China Resources vs. Longfor Group Holdings | China Resources vs. Sun Hung Kai | China Resources vs. Country Garden Holdings |
| Sun Hung vs. Sino Land Co | Sun Hung vs. Holiday Island Holdings | Sun Hung vs. Daiwa House Industry | Sun Hung vs. China Overseas Land |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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