Correlation Between SSF Home and Shangri La

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

By analyzing existing cross correlation between SSF Home Group and Shangri La Hotels, you can compare the effects of market volatilities on SSF Home and Shangri La 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 SSF Home with a short position of Shangri La. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSF Home and Shangri La.

Diversification Opportunities for SSF Home and Shangri La

0.32

Correlation Coefficient

SSF Home  Shangri La

Weak diversification

The 3 months correlation between SSF and Shangri is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SSF Home Group and Shangri La Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shangri La Hotels and SSF Home 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 SSF Home Group are associated (or correlated) with Shangri La. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shangri La Hotels has no effect on the direction of SSF Home i.e., SSF Home and Shangri La go up and down completely randomly.

Pair Corralation between SSF Home and Shangri La

Assuming the 90 days trading horizon SSF Home Group is expected to generate 1.44 times more return on investment than Shangri La. However, SSF Home is 1.44 times more volatile than Shangri La Hotels. It trades about 0.05 of its potential returns per unit of risk. Shangri La Hotels is currently generating about -0.04 per unit of risk. If you would invest  26.00  in SSF Home Group on October 9, 2024 and sell it today you would earn a total of  9.00  from holding SSF Home Group or generate 34.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.22%
Values	Daily Returns

SSF Home Group  vs.  Shangri La Hotels

SSF Home Group

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSF Home Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, SSF Home may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shangri La Hotels

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shangri La Hotels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Shangri La is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SSF Home and Shangri La

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

The idea behind SSF Home Group and Shangri La Hotels 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.