Correlation Between Sun Hung and Hang Lung
Can any of the company-specific risk be diversified away by investing in both Sun Hung and Hang Lung 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 Hang Lung 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 Hang Lung Properties, you can compare the effects of market volatilities on Sun Hung and Hang Lung 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 Hang Lung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and Hang Lung.
Diversification Opportunities for Sun Hung and Hang Lung
Very poor diversification
The 3 months correlation between Sun and Hang is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Hang Lung Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Properties 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 Hang Lung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Lung Properties has no effect on the direction of Sun Hung i.e., Sun Hung and Hang Lung go up and down completely randomly.
Pair Corralation between Sun Hung and Hang Lung
Assuming the 90 days horizon Sun Hung Kai is expected to generate 0.71 times more return on investment than Hang Lung. However, Sun Hung Kai is 1.42 times less risky than Hang Lung. It trades about -0.21 of its potential returns per unit of risk. Hang Lung Properties is currently generating about -0.19 per unit of risk. If you would invest 982.00 in Sun Hung Kai on January 11, 2025 and sell it today you would lose (94.00) from holding Sun Hung Kai or give up 9.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Hung Kai vs. Hang Lung Properties
Performance |
| Timeline |
| Sun Hung Kai |
| Hang Lung Properties |
Sun Hung and Hang Lung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and Hang Lung
The main advantage of trading using opposite Sun Hung and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, Hang Lung 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 Hang Lung will offset losses from the drop in Hang Lung's long position.| Sun Hung vs. Hong Kong Land | Sun Hung vs. Wharf Holdings | Sun Hung vs. Bayport International Holdings | Sun Hung vs. Sino Land Co |
| Hang Lung vs. CBRE Group Class | Hang Lung vs. CoStar Group | Hang Lung vs. Ke Holdings | Hang Lung vs. Vonovia SE ADR |
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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