Correlation Between Galaxy Entertainment and Sands China

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

By analyzing existing cross correlation between Galaxy Entertainment Group and Sands China Ltd, you can compare the effects of market volatilities on Galaxy Entertainment and Sands China 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 Galaxy Entertainment with a short position of Sands China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Entertainment and Sands China.

Diversification Opportunities for Galaxy Entertainment and Sands China

0.78

Correlation Coefficient

Galaxy Entertainment  Sands China

Poor diversification

The 3 months correlation between Galaxy and Sands is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Entertainment Group and Sands China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands China and Galaxy Entertainment 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 Galaxy Entertainment Group are associated (or correlated) with Sands China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands China has no effect on the direction of Galaxy Entertainment i.e., Galaxy Entertainment and Sands China go up and down completely randomly.

Pair Corralation between Galaxy Entertainment and Sands China

Assuming the 90 days horizon Galaxy Entertainment is expected to generate 1.5 times less return on investment than Sands China. But when comparing it to its historical volatility, Galaxy Entertainment Group is 1.04 times less risky than Sands China. It trades about 0.13 of its potential returns per unit of risk. Sands China Ltd is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,750  in Sands China Ltd on September 13, 2024 and sell it today you would earn a total of  953.00  from holding Sands China Ltd or generate 54.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Galaxy Entertainment Group  vs.  Sands China Ltd

Galaxy Entertainment

Risk-Adjusted Performance

10 of 100

OK

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

Sands China

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sands China Ltd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sands China showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galaxy Entertainment and Sands China

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

The idea behind Galaxy Entertainment Group and Sands China Ltd 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.