Correlation Between Megaworld Corp and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Megaworld Corp 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 Megaworld Corp and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Megaworld Corp ADR and Sun Hung Kai, you can compare the effects of market volatilities on Megaworld Corp 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 Megaworld Corp with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megaworld Corp and Sun Hung.
Diversification Opportunities for Megaworld Corp and Sun Hung
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Megaworld and Sun is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Megaworld Corp ADR 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 Megaworld Corp 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 Megaworld Corp ADR 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 Megaworld Corp i.e., Megaworld Corp and Sun Hung go up and down completely randomly.
Pair Corralation between Megaworld Corp and Sun Hung
Assuming the 90 days horizon Megaworld Corp ADR is expected to under-perform the Sun Hung. In addition to that, Megaworld Corp is 1.22 times more volatile than Sun Hung Kai. It trades about -0.18 of its total potential returns per unit of risk. Sun Hung Kai is currently generating about -0.13 per unit of volatility. If you would invest 1,059 in Sun Hung Kai on September 2, 2024 and sell it today you would lose (48.00) from holding Sun Hung Kai or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Megaworld Corp ADR vs. Sun Hung Kai
Performance |
| Timeline |
| Megaworld Corp ADR |
| Sun Hung Kai |
Megaworld Corp and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megaworld Corp and Sun Hung
The main advantage of trading using opposite Megaworld Corp and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megaworld Corp 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.| Megaworld Corp vs. BDO Unibank ADR | Megaworld Corp vs. Ayala Corp ADR | Megaworld Corp vs. Alliance Global Group | Megaworld Corp vs. Jollibee Foods Corp |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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