Correlation Between Hong Kong and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Hong Kong 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 Hong Kong and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong and and Sun Hung Kai, you can compare the effects of market volatilities on Hong Kong 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 Hong Kong with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Sun Hung.
Diversification Opportunities for Hong Kong and Sun Hung
Very good diversification
The 3 months correlation between Hong and Sun is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong and 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 Hong Kong 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 Hong Kong and 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 Hong Kong i.e., Hong Kong and Sun Hung go up and down completely randomly.
Pair Corralation between Hong Kong and Sun Hung
Assuming the 90 days horizon Hong Kong and is expected to generate 2.33 times more return on investment than Sun Hung. However, Hong Kong is 2.33 times more volatile than Sun Hung Kai. It trades about 0.01 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 84.00 in Hong Kong and on November 2, 2024 and sell it today you would lose (11.00) from holding Hong Kong and or give up 13.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong and vs. Sun Hung Kai
Performance |
| Timeline |
| Hong Kong |
| Sun Hung Kai |
Hong Kong and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Sun Hung
The main advantage of trading using opposite Hong Kong and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong 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.| Hong Kong vs. Henderson Land Development | Hong Kong vs. CLP Holdings | Hong Kong vs. Power Assets Holdings | Hong Kong vs. Hang Lung Properties |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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