Correlation Between Sun Hung and Mitsui Fudosan
Can any of the company-specific risk be diversified away by investing in both Sun Hung and Mitsui Fudosan 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 Mitsui Fudosan 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 Mitsui Fudosan Co, you can compare the effects of market volatilities on Sun Hung and Mitsui Fudosan 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 Mitsui Fudosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and Mitsui Fudosan.
Diversification Opportunities for Sun Hung and Mitsui Fudosan
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Mitsui is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Mitsui Fudosan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui Fudosan 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 Mitsui Fudosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui Fudosan has no effect on the direction of Sun Hung i.e., Sun Hung and Mitsui Fudosan go up and down completely randomly.
Pair Corralation between Sun Hung and Mitsui Fudosan
Assuming the 90 days horizon Sun Hung Kai is expected to under-perform the Mitsui Fudosan. In addition to that, Sun Hung is 1.18 times more volatile than Mitsui Fudosan Co. It trades about -0.26 of its total potential returns per unit of risk. Mitsui Fudosan Co is currently generating about -0.19 per unit of volatility. If you would invest 2,598 in Mitsui Fudosan Co on August 29, 2024 and sell it today you would lose (141.00) from holding Mitsui Fudosan Co or give up 5.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sun Hung Kai vs. Mitsui Fudosan Co
Performance |
| Timeline |
| Sun Hung Kai |
| Mitsui Fudosan |
Sun Hung and Mitsui Fudosan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Hung and Mitsui Fudosan
The main advantage of trading using opposite Sun Hung and Mitsui Fudosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, Mitsui Fudosan 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 Mitsui Fudosan will offset losses from the drop in Mitsui Fudosan'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 |
| Mitsui Fudosan vs. St Joe Company | Mitsui Fudosan vs. Stratus Properties | Mitsui Fudosan vs. New World Development |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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