Correlation Between SoftBank Group and Hammerson PLC

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

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

Diversification Opportunities for SoftBank Group and Hammerson PLC

-0.71

Correlation Coefficient

SoftBank Group  Hammerson PLC

Pay attention - limited upside

The 3 months correlation between SoftBank and Hammerson is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of SoftBank Group i.e., SoftBank Group and Hammerson PLC go up and down completely randomly.

Pair Corralation between SoftBank Group and Hammerson PLC

Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 1.72 times more return on investment than Hammerson PLC. However, SoftBank Group is 1.72 times more volatile than Hammerson PLC. It trades about 0.13 of its potential returns per unit of risk. Hammerson PLC is currently generating about -0.05 per unit of risk. If you would invest  814,779  in SoftBank Group Corp on September 14, 2024 and sell it today you would earn a total of  106,521  from holding SoftBank Group Corp or generate 13.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.63%
Values	Daily Returns

SoftBank Group Corp  vs.  Hammerson PLC

SoftBank Group Corp

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SoftBank Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hammerson PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hammerson PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hammerson PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SoftBank Group and Hammerson PLC

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

The idea behind SoftBank Group Corp and Hammerson PLC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..