Correlation Between Safe and Sun Hung

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

By analyzing existing cross correlation between Safe and Green and Sun Hung Kai, you can compare the effects of market volatilities on Safe 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 Safe with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe and Sun Hung.

Diversification Opportunities for Safe and Sun Hung

0.23

Correlation Coefficient

Safe  Sun Hung

Modest diversification

The 3 months correlation between Safe and Sun is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green 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 Safe 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 Safe and Green 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 Safe i.e., Safe and Sun Hung go up and down completely randomly.

Pair Corralation between Safe and Sun Hung

Considering the 90-day investment horizon Safe and Green is expected to under-perform the Sun Hung. In addition to that, Safe is 5.08 times more volatile than Sun Hung Kai. It trades about -0.08 of its total potential returns per unit of risk. Sun Hung Kai is currently generating about 0.06 per unit of volatility. If you would invest  956.00  in Sun Hung Kai on September 12, 2024 and sell it today you would earn a total of  53.00  from holding Sun Hung Kai or generate 5.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Safe and Green  vs.  Sun Hung Kai

Safe and Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sun Hung Kai

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Hung Kai are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking indicators, Sun Hung may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Safe and Sun Hung

The main advantage of trading using opposite Safe and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe 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 Safe and Green 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.