Correlation Between Daiwa House and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Daiwa House 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 Daiwa House and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiwa House Industry and Sun Hung Kai, you can compare the effects of market volatilities on Daiwa House 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 Daiwa House with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiwa House and Sun Hung.
Diversification Opportunities for Daiwa House and Sun Hung
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daiwa and Sun is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Daiwa House Industry 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 Daiwa House 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 Daiwa House Industry 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 Daiwa House i.e., Daiwa House and Sun Hung go up and down completely randomly.
Pair Corralation between Daiwa House and Sun Hung
Assuming the 90 days horizon Daiwa House Industry is expected to generate 0.93 times more return on investment than Sun Hung. However, Daiwa House Industry is 1.08 times less risky than Sun Hung. It trades about 0.02 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 2,843 in Daiwa House Industry on October 21, 2024 and sell it today you would earn a total of 136.00 from holding Daiwa House Industry or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daiwa House Industry vs. Sun Hung Kai
Performance |
| Timeline |
| Daiwa House Industry |
| Sun Hung Kai |
Daiwa House and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiwa House and Sun Hung
The main advantage of trading using opposite Daiwa House and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiwa House 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.| Daiwa House vs. Sino Land Co | Daiwa House vs. Sun Hung Kai | Daiwa House vs. Holiday Island Holdings | Daiwa House vs. China Overseas Land |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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