Correlation Between NOHO and Sun Hung
Can any of the company-specific risk be diversified away by investing in both NOHO 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 NOHO and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOHO Inc and Sun Hung Kai, you can compare the effects of market volatilities on NOHO 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 NOHO with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOHO and Sun Hung.
Diversification Opportunities for NOHO and Sun Hung
Very good diversification
The 3 months correlation between NOHO and Sun is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding NOHO Inc 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 NOHO 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 NOHO Inc 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 NOHO i.e., NOHO and Sun Hung go up and down completely randomly.
Pair Corralation between NOHO and Sun Hung
Given the investment horizon of 90 days NOHO Inc is expected to generate 9.03 times more return on investment than Sun Hung. However, NOHO is 9.03 times more volatile than Sun Hung Kai. It trades about 0.15 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.01 per unit of risk. If you would invest 0.01 in NOHO Inc on August 31, 2024 and sell it today you would earn a total of 0.01 from holding NOHO Inc or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.15% |
| Values | Daily Returns |
NOHO Inc vs. Sun Hung Kai
Performance |
| Timeline |
| NOHO Inc |
| Sun Hung Kai |
NOHO and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOHO and Sun Hung
The main advantage of trading using opposite NOHO and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOHO 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 NOHO Inc 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. 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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