Correlation Between Sunstone Hotel and BANK CENTRAL
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and BANK CENTRAL 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 BANK CENTRAL 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 BANK CENTRAL ASIA, you can compare the effects of market volatilities on Sunstone Hotel and BANK CENTRAL 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 BANK CENTRAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and BANK CENTRAL.
Diversification Opportunities for Sunstone Hotel and BANK CENTRAL
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sunstone and BANK is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA 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 BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and BANK CENTRAL go up and down completely randomly.
Pair Corralation between Sunstone Hotel and BANK CENTRAL
Assuming the 90 days horizon Sunstone Hotel Investors is expected to generate 1.15 times more return on investment than BANK CENTRAL. However, Sunstone Hotel is 1.15 times more volatile than BANK CENTRAL ASIA. It trades about 0.06 of its potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about -0.09 per unit of risk. If you would invest 992.00 in Sunstone Hotel Investors on November 8, 2024 and sell it today you would earn a total of 58.00 from holding Sunstone Hotel Investors or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. BANK CENTRAL ASIA
Performance |
| Timeline |
| Sunstone Hotel Investors |
| BANK CENTRAL ASIA |
Sunstone Hotel and BANK CENTRAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and BANK CENTRAL
The main advantage of trading using opposite Sunstone Hotel and BANK CENTRAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, BANK CENTRAL 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 BANK CENTRAL will offset losses from the drop in BANK CENTRAL's long position.| Sunstone Hotel vs. BROADPEAK SA EO | Sunstone Hotel vs. Shin Etsu Chemical Co | Sunstone Hotel vs. MAROC TELECOM | Sunstone Hotel vs. Quaker Chemical |
| BANK CENTRAL vs. COREBRIDGE FINANCIAL INC | BANK CENTRAL vs. Direct Line Insurance | BANK CENTRAL vs. Discover Financial Services | BANK CENTRAL vs. G III APPAREL GROUP |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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