Correlation Between Sun Hung and Deutsche Wohnen
Can any of the company-specific risk be diversified away by investing in both Sun Hung and Deutsche Wohnen 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 Sun Hung and Deutsche Wohnen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Hung Kai and Deutsche Wohnen SE, you can compare the effects of market volatilities on Sun Hung and Deutsche Wohnen 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 Sun Hung with a short position of Deutsche Wohnen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and Deutsche Wohnen.
Diversification Opportunities for Sun Hung and Deutsche Wohnen
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and Deutsche is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Deutsche Wohnen SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Wohnen SE and Sun Hung 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 Sun Hung Kai are associated (or correlated) with Deutsche Wohnen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Wohnen SE has no effect on the direction of Sun Hung i.e., Sun Hung and Deutsche Wohnen go up and down completely randomly.
Pair Corralation between Sun Hung and Deutsche Wohnen
Assuming the 90 days horizon Sun Hung Kai is expected to generate 2.64 times more return on investment than Deutsche Wohnen. However, Sun Hung is 2.64 times more volatile than Deutsche Wohnen SE. It trades about 0.11 of its potential returns per unit of risk. Deutsche Wohnen SE is currently generating about -0.05 per unit of risk. If you would invest 692.00 in Sun Hung Kai on September 24, 2024 and sell it today you would earn a total of 208.00 from holding Sun Hung Kai or generate 30.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Hung Kai vs. Deutsche Wohnen SE
Performance |
Timeline |
Sun Hung Kai |
Deutsche Wohnen SE |
Sun Hung and Deutsche Wohnen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Hung and Deutsche Wohnen
The main advantage of trading using opposite Sun Hung and Deutsche Wohnen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Hung position performs unexpectedly, Deutsche Wohnen 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 Deutsche Wohnen will offset losses from the drop in Deutsche Wohnen's long position.Sun Hung vs. China Overseas Land | Sun Hung vs. Longfor Group Holdings | Sun Hung vs. Mitsui Fudosan Co | Sun Hung vs. Mitsubishi Estate Co |
Deutsche Wohnen vs. Sun Hung Kai | Deutsche Wohnen vs. China Overseas Land | Deutsche Wohnen vs. Longfor Group Holdings | Deutsche Wohnen vs. Mitsui Fudosan Co |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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