Correlation Between Sun Hung and HeidelbergCement
Can any of the company-specific risk be diversified away by investing in both Sun Hung and HeidelbergCement 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 HeidelbergCement 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 HeidelbergCement AG ADR, you can compare the effects of market volatilities on Sun Hung and HeidelbergCement 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 HeidelbergCement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and HeidelbergCement.
Diversification Opportunities for Sun Hung and HeidelbergCement
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and HeidelbergCement is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and HeidelbergCement AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeidelbergCement AG ADR 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 HeidelbergCement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeidelbergCement AG ADR has no effect on the direction of Sun Hung i.e., Sun Hung and HeidelbergCement go up and down completely randomly.
Pair Corralation between Sun Hung and HeidelbergCement
Assuming the 90 days horizon Sun Hung Kai is expected to under-perform the HeidelbergCement. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sun Hung Kai is 1.07 times less risky than HeidelbergCement. The pink sheet trades about -0.02 of its potential returns per unit of risk. The HeidelbergCement AG ADR is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,022 in HeidelbergCement AG ADR on September 3, 2024 and sell it today you would earn a total of 1,498 from holding HeidelbergCement AG ADR or generate 146.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Hung Kai vs. HeidelbergCement AG ADR
Performance |
| Timeline |
| Sun Hung Kai |
| HeidelbergCement AG ADR |
Sun Hung and HeidelbergCement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and HeidelbergCement
The main advantage of trading using opposite Sun Hung and HeidelbergCement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, HeidelbergCement 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 HeidelbergCement will offset losses from the drop in HeidelbergCement's long position.| Sun Hung vs. Hong Kong Land | Sun Hung vs. Wharf Holdings | Sun Hung vs. Holiday Island Holdings | Sun Hung vs. Bayport International Holdings |
| HeidelbergCement vs. Anhui Conch Cement | HeidelbergCement vs. Holcim | HeidelbergCement vs. Buzzi Unicem SpA | HeidelbergCement vs. Wienerberger Baustoffindustrie |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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