Correlation Between Sands China and ENTAIN PLC

Can any of the company-specific risk be diversified away by investing in both Sands China and ENTAIN PLC 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 Sands China and ENTAIN PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sands China and ENTAIN PLC UNSPADR1, you can compare the effects of market volatilities on Sands China and ENTAIN PLC 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 Sands China with a short position of ENTAIN PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sands China and ENTAIN PLC.

Diversification Opportunities for Sands China and ENTAIN PLC

0.58

Correlation Coefficient

Sands China  ENTAIN PLC

Very weak diversification

The 3 months correlation between Sands and ENTAIN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sands China and ENTAIN PLC UNSPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTAIN PLC UNSPADR1 and Sands China 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 Sands China are associated (or correlated) with ENTAIN PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTAIN PLC UNSPADR1 has no effect on the direction of Sands China i.e., Sands China and ENTAIN PLC go up and down completely randomly.

Pair Corralation between Sands China and ENTAIN PLC

Assuming the 90 days trading horizon Sands China is expected to generate 2.08 times more return on investment than ENTAIN PLC. However, Sands China is 2.08 times more volatile than ENTAIN PLC UNSPADR1. It trades about 0.19 of its potential returns per unit of risk. ENTAIN PLC UNSPADR1 is currently generating about 0.11 per unit of risk. If you would invest  153.00  in Sands China on September 12, 2024 and sell it today you would earn a total of  97.00  from holding Sands China or generate 63.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sands China  vs.  ENTAIN PLC UNSPADR1

Sands China

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sands China are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sands China reported solid returns over the last few months and may actually be approaching a breakup point.

ENTAIN PLC UNSPADR1

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ENTAIN PLC UNSPADR1 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, ENTAIN PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sands China and ENTAIN PLC

The main advantage of trading using opposite Sands China and ENTAIN PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sands China position performs unexpectedly, ENTAIN PLC 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 ENTAIN PLC will offset losses from the drop in ENTAIN PLC's long position.

The idea behind Sands China and ENTAIN PLC UNSPADR1 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.