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
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daiwa and Sun is 0.09. 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 is expected to generate 4.24 times less return on investment than Sun Hung. But when comparing it to its historical volatility, Daiwa House Industry is 5.52 times less risky than Sun Hung. It trades about 0.27 of its potential returns per unit of risk. Sun Hung Kai is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 717.00 in Sun Hung Kai on August 31, 2024 and sell it today you would earn a total of 218.00 from holding Sun Hung Kai or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| 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. Sun Hung Kai | Daiwa House vs. China Overseas Land | Daiwa House vs. CHINA VANKE TD | Daiwa House vs. Longfor Group Holdings |
| Sun Hung vs. PRECISION DRILLING P | Sun Hung vs. KAUFMAN ET BROAD | Sun Hung vs. AWILCO DRILLING PLC | Sun Hung vs. NTG Nordic Transport |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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