Correlation Between Sun Hung and China Overseas
Can any of the company-specific risk be diversified away by investing in both Sun Hung and China Overseas 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 Overseas 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 Overseas Land, you can compare the effects of market volatilities on Sun Hung and China Overseas 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 Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and China Overseas.
Diversification Opportunities for Sun Hung and China Overseas
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and China is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas 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 Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of Sun Hung i.e., Sun Hung and China Overseas go up and down completely randomly.
Pair Corralation between Sun Hung and China Overseas
Assuming the 90 days horizon Sun Hung Kai is expected to generate 0.49 times more return on investment than China Overseas. However, Sun Hung Kai is 2.04 times less risky than China Overseas. It trades about -0.16 of its potential returns per unit of risk. China Overseas Land is currently generating about -0.23 per unit of risk. If you would invest 1,048 in Sun Hung Kai on August 24, 2024 and sell it today you would lose (58.00) from holding Sun Hung Kai or give up 5.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Hung Kai vs. China Overseas Land
Performance |
| Timeline |
| Sun Hung Kai |
| China Overseas Land |
Sun Hung and China Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and China Overseas
The main advantage of trading using opposite Sun Hung and China Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, China Overseas 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 Overseas will offset losses from the drop in China Overseas' long position.| Sun Hung vs. Wharf Holdings | Sun Hung vs. Hong Kong Land | Sun Hung vs. Country Garden Holdings | Sun Hung vs. Country Garden Holdings |
| China Overseas vs. Sun Hung Kai | China Overseas vs. China Overseas Land | China Overseas vs. EGRNF | China Overseas 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Stocks Directory Find actively traded stocks across global markets |