Correlation Between Chuangs China and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Chuangs China 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 Chuangs China and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and Sun Hung Kai, you can compare the effects of market volatilities on Chuangs China 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 Chuangs China with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Sun Hung.
Diversification Opportunities for Chuangs China and Sun Hung
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and Sun is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments 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 Chuangs China 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 Chuangs China Investments 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 Chuangs China i.e., Chuangs China and Sun Hung go up and down completely randomly.
Pair Corralation between Chuangs China and Sun Hung
Assuming the 90 days horizon Chuangs China Investments is expected to under-perform the Sun Hung. In addition to that, Chuangs China is 1.77 times more volatile than Sun Hung Kai. It trades about -0.01 of its total potential returns per unit of risk. Sun Hung Kai is currently generating about 0.06 per unit of volatility. If you would invest 450.00 in Sun Hung Kai on September 2, 2024 and sell it today you would earn a total of 480.00 from holding Sun Hung Kai or generate 106.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. Sun Hung Kai
Performance |
| Timeline |
| Chuangs China Investments |
| Sun Hung Kai |
Chuangs China and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Sun Hung
The main advantage of trading using opposite Chuangs China and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China 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.| Chuangs China vs. Corporate Office Properties | Chuangs China vs. 24SEVENOFFICE GROUP AB | Chuangs China vs. MTI WIRELESS EDGE | Chuangs China vs. Tower One Wireless |
| Sun Hung vs. PUBLIC STORAGE PRFO | Sun Hung vs. AXWAY SOFTWARE EO | Sun Hung vs. Datang International Power | Sun Hung vs. PSI Software AG |
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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