Correlation Between Sunstone Hotel and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Sunstone Hotel and Sanyo Chemical 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 Sanyo Chemical 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on Sunstone Hotel and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunstone Hotel and Sanyo Chemical.
Diversification Opportunities for Sunstone Hotel and Sanyo Chemical
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sunstone and Sanyo is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sunstone Hotel Investors and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Sunstone Hotel i.e., Sunstone Hotel and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Sunstone Hotel and Sanyo Chemical
Assuming the 90 days horizon Sunstone Hotel Investors is expected to under-perform the Sanyo Chemical. In addition to that, Sunstone Hotel is 1.31 times more volatile than Sanyo Chemical Industries. It trades about -0.14 of its total potential returns per unit of risk. Sanyo Chemical Industries is currently generating about -0.17 per unit of volatility. If you would invest 2,440 in Sanyo Chemical Industries on October 29, 2024 and sell it today you would lose (80.00) from holding Sanyo Chemical Industries or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunstone Hotel Investors vs. Sanyo Chemical Industries
Performance |
| Timeline |
| Sunstone Hotel Investors |
| Sanyo Chemical Industries |
Sunstone Hotel and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunstone Hotel and Sanyo Chemical
The main advantage of trading using opposite Sunstone Hotel and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunstone Hotel position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| Sunstone Hotel vs. Host Hotels Resorts | Sunstone Hotel vs. Xenia Hotels Resorts | Sunstone Hotel vs. Summit Hotel Properties |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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