Correlation Between Sunstone Hotel and ZhongAn Online
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and ZhongAn Online 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 Sunstone Hotel and ZhongAn Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunstone Hotel Investors and ZhongAn Online P, you can compare the effects of market volatilities on Sunstone Hotel and ZhongAn Online 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 Sunstone Hotel with a short position of ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and ZhongAn Online.
Diversification Opportunities for Sunstone Hotel and ZhongAn Online
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sunstone and ZhongAn is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and ZhongAn Online P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZhongAn Online P and Sunstone Hotel 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 Sunstone Hotel Investors are associated (or correlated) with ZhongAn Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZhongAn Online P has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and ZhongAn Online go up and down completely randomly.
Pair Corralation between Sunstone Hotel and ZhongAn Online
Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the ZhongAn Online. But the stock apears to be less risky and, when comparing its historical volatility, Sunstone Hotel Investors is 1.71 times less risky than ZhongAn Online. The stock trades about -0.21 of its potential returns per unit of risk. The ZhongAn Online P is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 134.00 in ZhongAn Online P on November 7, 2024 and sell it today you would earn a total of 19.00 from holding ZhongAn Online P or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. ZhongAn Online P
Performance |
| Timeline |
| Sunstone Hotel Investors |
| ZhongAn Online P |
Sunstone Hotel and ZhongAn Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and ZhongAn Online
The main advantage of trading using opposite Sunstone Hotel and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, ZhongAn Online 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 ZhongAn Online will offset losses from the drop in ZhongAn Online's long position.| Sunstone Hotel vs. SBM OFFSHORE | Sunstone Hotel vs. Ares Management Corp | Sunstone Hotel vs. STGEORGE MINING LTD | Sunstone Hotel vs. Cardinal Health |
| ZhongAn Online vs. CLOVER HEALTH INV | ZhongAn Online vs. PURE FOODS TASMANIA | ZhongAn Online vs. PLANT VEDA FOODS | ZhongAn Online vs. Planet Fitness |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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