Correlation Between St Joe and Sun Hung
Can any of the company-specific risk be diversified away by investing in both St Joe 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 St Joe and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between St Joe Company and Sun Hung Kai, you can compare the effects of market volatilities on St Joe 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 St Joe with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of St Joe and Sun Hung.
Diversification Opportunities for St Joe and Sun Hung
Excellent diversification
The 3 months correlation between JOE and Sun is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding St Joe Company 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 St Joe 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 St Joe Company 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 St Joe i.e., St Joe and Sun Hung go up and down completely randomly.
Pair Corralation between St Joe and Sun Hung
Assuming the 90 days horizon St Joe Company is expected to under-perform the Sun Hung. But the stock apears to be less risky and, when comparing its historical volatility, St Joe Company is 1.87 times less risky than Sun Hung. The stock trades about -0.04 of its potential returns per unit of risk. The Sun Hung Kai is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 628.00 in Sun Hung Kai on September 3, 2024 and sell it today you would earn a total of 302.00 from holding Sun Hung Kai or generate 48.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
St Joe Company vs. Sun Hung Kai
Performance |
| Timeline |
| St Joe Company |
| Sun Hung Kai |
St Joe and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with St Joe and Sun Hung
The main advantage of trading using opposite St Joe and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if St Joe 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.| St Joe vs. Gamma Communications plc | St Joe vs. Consolidated Communications Holdings | St Joe vs. Ribbon Communications | St Joe vs. Cogent Communications Holdings |
| Sun Hung vs. Sumitomo Rubber Industries | Sun Hung vs. Materialise NV | Sun Hung vs. PUBLIC STORAGE PRFO | Sun Hung vs. MICRONIC MYDATA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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