Correlation Between Goosehead Insurance and Sun Hung

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

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

Diversification Opportunities for Goosehead Insurance and Sun Hung

0.84

Correlation Coefficient

Goosehead Insurance  Sun Hung

Very poor diversification

The 3 months correlation between Goosehead and Sun is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Goosehead Insurance 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 Goosehead Insurance 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 Goosehead Insurance 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 Goosehead Insurance i.e., Goosehead Insurance and Sun Hung go up and down completely randomly.

Pair Corralation between Goosehead Insurance and Sun Hung

Assuming the 90 days trading horizon Goosehead Insurance is expected to under-perform the Sun Hung. In addition to that, Goosehead Insurance is 1.34 times more volatile than Sun Hung Kai. It trades about -0.36 of its total potential returns per unit of risk. Sun Hung Kai is currently generating about -0.12 per unit of volatility. If you would invest  925.00  in Sun Hung Kai on October 10, 2024 and sell it today you would lose (30.00) from holding Sun Hung Kai or give up 3.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.44%
Values	Daily Returns

Goosehead Insurance  vs.  Sun Hung Kai

Goosehead Insurance

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goosehead Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goosehead Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sun Hung Kai

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Hung Kai are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sun Hung reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goosehead Insurance and Sun Hung

The main advantage of trading using opposite Goosehead Insurance and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goosehead Insurance 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 Goosehead Insurance 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.