Correlation Between Sun Hung and Holiday Island
Can any of the company-specific risk be diversified away by investing in both Sun Hung and Holiday Island 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 Holiday Island 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 Holiday Island Holdings, you can compare the effects of market volatilities on Sun Hung and Holiday Island 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 Holiday Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and Holiday Island.
Diversification Opportunities for Sun Hung and Holiday Island
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sun and Holiday is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Holiday Island Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Island 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 Holiday Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Island Holdings has no effect on the direction of Sun Hung i.e., Sun Hung and Holiday Island go up and down completely randomly.
Pair Corralation between Sun Hung and Holiday Island
Assuming the 90 days horizon Sun Hung Kai is expected to under-perform the Holiday Island. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sun Hung Kai is 24.68 times less risky than Holiday Island. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Holiday Island Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Holiday Island Holdings on November 2, 2024 and sell it today you would earn a total of 1.30 from holding Holiday Island Holdings or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Hung Kai vs. Holiday Island Holdings
Performance |
| Timeline |
| Sun Hung Kai |
| Holiday Island Holdings |
Sun Hung and Holiday Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and Holiday Island
The main advantage of trading using opposite Sun Hung and Holiday Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, Holiday Island 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 Holiday Island will offset losses from the drop in Holiday Island'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 |
| Holiday Island vs. Hong Kong Land | Holiday Island vs. Wharf Holdings | Holiday Island vs. Sun Hung Kai | Holiday Island vs. Bayport International Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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