Correlation Between China Resources and Sun Hung

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Can any of the company-specific risk be diversified away by investing in both China Resources and Sun Hung 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 China Resources and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Land and Sun Hung Kai, you can compare the effects of market volatilities on China Resources and Sun Hung 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 China Resources with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Sun Hung.

Diversification Opportunities for China Resources and Sun Hung

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between China and Sun is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Land and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai and China Resources 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 China Resources Land are associated (or correlated) with Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of China Resources i.e., China Resources and Sun Hung go up and down completely randomly.

Pair Corralation between China Resources and Sun Hung

Assuming the 90 days horizon China Resources Land is expected to generate 0.57 times more return on investment than Sun Hung. However, China Resources Land is 1.75 times less risky than Sun Hung. It trades about 0.01 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.03 per unit of risk. If you would invest  315.00  in China Resources Land on December 30, 2023 and sell it today you would earn a total of  0.00  from holding China Resources Land or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

China Resources Land  vs.  Sun Hung Kai

 Performance 
       Timeline  
China Resources Land 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days China Resources Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Sun Hung Kai 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Sun Hung Kai has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

China Resources and Sun Hung Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Resources and Sun Hung

The main advantage of trading using opposite China Resources and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Sun Hung 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 Sun Hung will offset losses from the drop in Sun Hung's long position.
The idea behind China Resources Land and Sun Hung Kai pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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