Correlation Between Gilead Sciences and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences 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 Gilead Sciences and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and Sun Hung Kai, you can compare the effects of market volatilities on Gilead Sciences 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 Gilead Sciences with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Sun Hung.
Diversification Opportunities for Gilead Sciences and Sun Hung
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gilead and Sun is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences 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 Gilead Sciences 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 Gilead Sciences 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 Gilead Sciences i.e., Gilead Sciences and Sun Hung go up and down completely randomly.
Pair Corralation between Gilead Sciences and Sun Hung
Given the investment horizon of 90 days Gilead Sciences is expected to generate 0.94 times more return on investment than Sun Hung. However, Gilead Sciences is 1.06 times less risky than Sun Hung. It trades about 0.03 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.04 per unit of risk. If you would invest 8,093 in Gilead Sciences on November 2, 2024 and sell it today you would earn a total of 1,728 from holding Gilead Sciences or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gilead Sciences vs. Sun Hung Kai
Performance |
| Timeline |
| Gilead Sciences |
| Sun Hung Kai |
Gilead Sciences and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and Sun Hung
The main advantage of trading using opposite Gilead Sciences and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences 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.| Gilead Sciences vs. Amgen Inc | Gilead Sciences vs. Merck Company | Gilead Sciences vs. AbbVie Inc | Gilead Sciences vs. Johnson Johnson |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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