Correlation Between PRECISION DRILLING and Sun Hung
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING 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 PRECISION DRILLING and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PRECISION DRILLING P and Sun Hung Kai, you can compare the effects of market volatilities on PRECISION DRILLING 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 PRECISION DRILLING with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and Sun Hung.
Diversification Opportunities for PRECISION DRILLING and Sun Hung
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between PRECISION and Sun is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P 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 PRECISION DRILLING 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 PRECISION DRILLING P 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 PRECISION DRILLING i.e., PRECISION DRILLING and Sun Hung go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and Sun Hung
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to generate 3.11 times more return on investment than Sun Hung. However, PRECISION DRILLING is 3.11 times more volatile than Sun Hung Kai. It trades about -0.03 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.31 per unit of risk. If you would invest 4,000 in PRECISION DRILLING P on January 13, 2025 and sell it today you would lose (360.00) from holding PRECISION DRILLING P or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. Sun Hung Kai
Performance |
| Timeline |
| PRECISION DRILLING |
| Sun Hung Kai |
PRECISION DRILLING and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and Sun Hung
The main advantage of trading using opposite PRECISION DRILLING and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING 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.| PRECISION DRILLING vs. Monument Mining Limited | PRECISION DRILLING vs. Eurasia Mining Plc | PRECISION DRILLING vs. Japan Asia Investment | PRECISION DRILLING vs. CapitaLand Investment Limited |
| Sun Hung vs. CHINA VANKE TD | Sun Hung vs. Longfor Group Holdings | Sun Hung vs. Mitsui Fudosan Co | Sun Hung vs. Mitsubishi Estate Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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