Correlation Between Sands China and Las Vegas

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

By analyzing existing cross correlation between Sands China and Las Vegas Sands, you can compare the effects of market volatilities on Sands China and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sands China and Las Vegas.

Diversification Opportunities for Sands China and Las Vegas

0.96

Correlation Coefficient

Sands China  Las Vegas

Almost no diversification

The 3 months correlation between Sands and Las is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sands China and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Sands China i.e., Sands China and Las Vegas go up and down completely randomly.

Pair Corralation between Sands China and Las Vegas

Assuming the 90 days trading horizon Sands China is expected to generate 2.13 times more return on investment than Las Vegas. However, Sands China is 2.13 times more volatile than Las Vegas Sands. It trades about 0.16 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.28 per unit of risk. If you would invest  154.00  in Sands China on September 3, 2024 and sell it today you would earn a total of  78.00  from holding Sands China or generate 50.65% return on investment over 90 days.

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

Sands China  vs.  Las Vegas Sands

Sands China

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sands China are ranked lower than 12 (%) 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.

Las Vegas Sands

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Las Vegas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sands China and Las Vegas

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

The idea behind Sands China and Las Vegas Sands 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.