Correlation Between Sun Hung and City Developments
Can any of the company-specific risk be diversified away by investing in both Sun Hung and City Developments 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 Sun Hung and City Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Hung Kai and City Developments Limited, you can compare the effects of market volatilities on Sun Hung and City Developments 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 Sun Hung with a short position of City Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and City Developments.
Diversification Opportunities for Sun Hung and City Developments
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sun and City is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and City Developments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Developments and Sun Hung 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 Sun Hung Kai are associated (or correlated) with City Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Developments has no effect on the direction of Sun Hung i.e., Sun Hung and City Developments go up and down completely randomly.
Pair Corralation between Sun Hung and City Developments
Assuming the 90 days horizon Sun Hung Kai is expected to generate 2.39 times more return on investment than City Developments. However, Sun Hung is 2.39 times more volatile than City Developments Limited. It trades about 0.01 of its potential returns per unit of risk. City Developments Limited is currently generating about -0.08 per unit of risk. If you would invest 1,244 in Sun Hung Kai on September 3, 2024 and sell it today you would lose (224.00) from holding Sun Hung Kai or give up 18.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.58% |
| Values | Daily Returns |
Sun Hung Kai vs. City Developments Limited
Performance |
| Timeline |
| Sun Hung Kai |
| City Developments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sun Hung and City Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and City Developments
The main advantage of trading using opposite Sun Hung and City Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, City Developments 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 City Developments will offset losses from the drop in City Developments' long position.| Sun Hung vs. Sino Land Co | Sun Hung vs. Holiday Island Holdings | Sun Hung vs. Daiwa House Industry | Sun Hung vs. China Overseas Land |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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