Correlation Between Sun Hung and Power Assets
Can any of the company-specific risk be diversified away by investing in both Sun Hung and Power Assets 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 Power Assets 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 Power Assets Holdings, you can compare the effects of market volatilities on Sun Hung and Power Assets 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 Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and Power Assets.
Diversification Opportunities for Sun Hung and Power Assets
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Power is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Sun Hung i.e., Sun Hung and Power Assets go up and down completely randomly.
Pair Corralation between Sun Hung and Power Assets
Assuming the 90 days horizon Sun Hung is expected to generate 2.21 times less return on investment than Power Assets. But when comparing it to its historical volatility, Sun Hung Kai is 1.05 times less risky than Power Assets. It trades about 0.04 of its potential returns per unit of risk. Power Assets Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 557.00 in Power Assets Holdings on August 29, 2024 and sell it today you would earn a total of 88.00 from holding Power Assets Holdings or generate 15.8% 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. Power Assets Holdings
Performance |
| Timeline |
| Sun Hung Kai |
| Power Assets Holdings |
Sun Hung and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and Power Assets
The main advantage of trading using opposite Sun Hung and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' 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 |
| Power Assets vs. TransAlta Corp | Power Assets vs. Pampa Energia SA | Power Assets vs. Vistra Energy Corp | Power Assets vs. NRG Energy |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |