Correlation Between Meta Platforms and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Sun Hung Kai, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Sun Hung.
Diversification Opportunities for Meta Platforms and Sun Hung
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meta and Sun is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms 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 Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Sun Hung go up and down completely randomly.
Pair Corralation between Meta Platforms and Sun Hung
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.56 times more return on investment than Sun Hung. However, Meta Platforms is 1.77 times less risky than Sun Hung. It trades about 0.11 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.01 per unit of risk. If you would invest 26,379 in Meta Platforms on August 31, 2024 and sell it today you would earn a total of 31,053 from holding Meta Platforms or generate 117.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 64.97% |
| Values | Daily Returns |
Meta Platforms vs. Sun Hung Kai
Performance |
| Timeline |
| Meta Platforms |
| Sun Hung Kai |
Meta Platforms and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and Sun Hung
The main advantage of trading using opposite Meta Platforms and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
| Sun Hung vs. HUMANA INC | Sun Hung vs. SCOR PK | Sun Hung vs. Aquagold International | Sun Hung vs. Thrivent High Yield |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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