Correlation Between Sun Hung and China Resources
Can any of the company-specific risk be diversified away by investing in both Sun Hung and China Resources 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 China Resources 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 China Resources Land, you can compare the effects of market volatilities on Sun Hung and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and China Resources.
Diversification Opportunities for Sun Hung and China Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of Sun Hung i.e., Sun Hung and China Resources go up and down completely randomly.
Pair Corralation between Sun Hung and China Resources
If you would invest 343.00 in China Resources Land on August 24, 2024 and sell it today you would earn a total of 0.00 from holding China Resources Land or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sun Hung Kai vs. China Resources Land
Performance |
| Timeline |
| Sun Hung Kai |
| China Resources Land |
Sun Hung and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and China Resources
The main advantage of trading using opposite Sun Hung and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' 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 |
| China Resources vs. Sun Hung Kai | China Resources vs. China Overseas Land | China Resources vs. EGRNF | China Resources vs. Sino Land 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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