Correlation Between Sun Hung and Megaworld Corp
Can any of the company-specific risk be diversified away by investing in both Sun Hung and Megaworld Corp 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 Megaworld Corp 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 Megaworld Corp ADR, you can compare the effects of market volatilities on Sun Hung and Megaworld Corp 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 Megaworld Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and Megaworld Corp.
Diversification Opportunities for Sun Hung and Megaworld Corp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Megaworld is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Megaworld Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megaworld Corp 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 Megaworld Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megaworld Corp ADR has no effect on the direction of Sun Hung i.e., Sun Hung and Megaworld Corp go up and down completely randomly.
Pair Corralation between Sun Hung and Megaworld Corp
Assuming the 90 days horizon Sun Hung Kai is expected to generate 0.82 times more return on investment than Megaworld Corp. However, Sun Hung Kai is 1.22 times less risky than Megaworld Corp. It trades about -0.13 of its potential returns per unit of risk. Megaworld Corp ADR is currently generating about -0.18 per unit of risk. If you would invest 1,059 in Sun Hung Kai on September 2, 2024 and sell it today you would lose (48.00) from holding Sun Hung Kai or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Hung Kai vs. Megaworld Corp ADR
Performance |
| Timeline |
| Sun Hung Kai |
| Megaworld Corp ADR |
Sun Hung and Megaworld Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and Megaworld Corp
The main advantage of trading using opposite Sun Hung and Megaworld Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, Megaworld Corp 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 Megaworld Corp will offset losses from the drop in Megaworld Corp's long position.| Sun Hung vs. HUMANA INC | Sun Hung vs. SCOR PK | Sun Hung vs. Aquagold International | Sun Hung vs. Thrivent High Yield |
| Megaworld Corp vs. BDO Unibank ADR | Megaworld Corp vs. Ayala Corp ADR | Megaworld Corp vs. Alliance Global Group | Megaworld Corp vs. Jollibee Foods Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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