Correlation Between Bank Central and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Bank Central 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 Bank Central and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Sun Hung Kai, you can compare the effects of market volatilities on Bank Central 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 Bank Central with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Sun Hung.
Diversification Opportunities for Bank Central and Sun Hung
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Sun is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia 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 Bank Central 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 Bank Central Asia 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 Bank Central i.e., Bank Central and Sun Hung go up and down completely randomly.
Pair Corralation between Bank Central and Sun Hung
Assuming the 90 days horizon Bank Central Asia is expected to generate 0.93 times more return on investment than Sun Hung. However, Bank Central Asia is 1.07 times less risky than Sun Hung. 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 1,393 in Bank Central Asia on November 2, 2024 and sell it today you would earn a total of 27.00 from holding Bank Central Asia or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Sun Hung Kai
Performance |
| Timeline |
| Bank Central Asia |
| Sun Hung Kai |
Bank Central and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Sun Hung
The main advantage of trading using opposite Bank Central and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central 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.| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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