Correlation Between Landsea Homes and Sun Hung

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

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

Diversification Opportunities for Landsea Homes and Sun Hung

-0.26

Correlation Coefficient

Landsea Homes  Sun Hung

Very good diversification

The 3 months correlation between Landsea and Sun is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Landsea Homes Corp 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 Landsea Homes 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 Landsea Homes Corp 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 Landsea Homes i.e., Landsea Homes and Sun Hung go up and down completely randomly.

Pair Corralation between Landsea Homes and Sun Hung

Given the investment horizon of 90 days Landsea Homes Corp is expected to under-perform the Sun Hung. In addition to that, Landsea Homes is 1.94 times more volatile than Sun Hung Kai. It trades about -0.07 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  959.00  in Sun Hung Kai on December 28, 2024 and sell it today you would earn a total of  127.00  from holding Sun Hung Kai or generate 13.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

Landsea Homes Corp  vs.  Sun Hung Kai

Landsea Homes Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Landsea Homes Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sun Hung Kai

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Hung Kai are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, Sun Hung reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Landsea Homes and Sun Hung

The main advantage of trading using opposite Landsea Homes and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landsea Homes 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 Landsea Homes Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.