Correlation Between Henderson Land and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Henderson Land 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 Henderson Land and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson Land Development and Sun Hung Kai, you can compare the effects of market volatilities on Henderson Land 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 Henderson Land with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson Land and Sun Hung.
Diversification Opportunities for Henderson Land and Sun Hung
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Henderson and Sun is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Land Development 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 Henderson Land 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 Henderson Land Development 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 Henderson Land i.e., Henderson Land and Sun Hung go up and down completely randomly.
Pair Corralation between Henderson Land and Sun Hung
Assuming the 90 days horizon Henderson Land Development is expected to generate 1.41 times more return on investment than Sun Hung. However, Henderson Land is 1.41 times more volatile than Sun Hung Kai. It trades about 0.05 of its potential returns per unit of risk. Sun Hung Kai is currently generating about 0.02 per unit of risk. If you would invest 252.00 in Henderson Land Development on August 25, 2024 and sell it today you would earn a total of 64.00 from holding Henderson Land Development or generate 25.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henderson Land Development vs. Sun Hung Kai
Performance |
| Timeline |
| Henderson Land Devel |
| Sun Hung Kai |
Henderson Land and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson Land and Sun Hung
The main advantage of trading using opposite Henderson Land and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Land 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.| Henderson Land vs. Sun Hung Kai | Henderson Land vs. Hang Lung Properties | Henderson Land vs. Swire Pacific | Henderson Land vs. Sino Land Co |
| Sun Hung vs. Sun Hung Kai | Sun Hung vs. China Resources Land | Sun Hung vs. China Resources Land | Sun Hung vs. China Vanke Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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