Correlation Between Hong Kong and Las Vegas

Can any of the company-specific risk be diversified away by investing in both Hong Kong and Las Vegas 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 Hong Kong and Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hong Kong Land and Las Vegas Sands, you can compare the effects of market volatilities on Hong Kong and Las Vegas 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 Hong Kong with a short position of Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Las Vegas.

Diversification Opportunities for Hong Kong and Las Vegas

0.0

Correlation Coefficient

Hong Kong  Las Vegas

Pay attention - limited upside

The 3 months correlation between Hong and Las is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands and Hong Kong 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 Hong Kong Land are associated (or correlated) with Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Hong Kong i.e., Hong Kong and Las Vegas go up and down completely randomly.

Pair Corralation between Hong Kong and Las Vegas

If you would invest  3,997  in Las Vegas Sands on September 13, 2024 and sell it today you would earn a total of  1,500  from holding Las Vegas Sands or generate 37.53% return on investment over 90 days.

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

Hong Kong Land  vs.  Las Vegas Sands

Hong Kong Land

Risk-Adjusted Performance

0 of 100

Very Weak

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

Las Vegas Sands

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Las Vegas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hong Kong and Las Vegas

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

The idea behind Hong Kong Land and Las Vegas Sands 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.