Correlation Between Holiday Island and Sun Hung

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

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

Diversification Opportunities for Holiday Island and Sun Hung

-0.35

Correlation Coefficient

Holiday Island  Sun Hung

Very good diversification

The 3 months correlation between Holiday and Sun is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Island Holdings 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 Holiday Island 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 Holiday Island Holdings 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 Holiday Island i.e., Holiday Island and Sun Hung go up and down completely randomly.

Pair Corralation between Holiday Island and Sun Hung

Given the investment horizon of 90 days Holiday Island Holdings is expected to generate 12.9 times more return on investment than Sun Hung. However, Holiday Island is 12.9 times more volatile than Sun Hung Kai. It trades about 0.15 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.14 per unit of risk. If you would invest  2.33  in Holiday Island Holdings on September 1, 2024 and sell it today you would earn a total of  0.67  from holding Holiday Island Holdings or generate 28.76% return on investment over 90 days.

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

Holiday Island Holdings  vs.  Sun Hung Kai

Holiday Island Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Holiday Island Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Holiday Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sun Hung Kai

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Hung Kai are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking indicators, Sun Hung may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Holiday Island and Sun Hung

The main advantage of trading using opposite Holiday Island and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Island 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 Holiday Island Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.