Correlation Between Las Vegas and Sands China

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

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

Diversification Opportunities for Las Vegas and Sands China

0.94

Correlation Coefficient

Las Vegas  Sands China

Almost no diversification

The 3 months correlation between Las and Sands is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Sands China Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands China and Las Vegas 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 Las Vegas Sands 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 Las Vegas i.e., Las Vegas and Sands China go up and down completely randomly.

Pair Corralation between Las Vegas and Sands China

Considering the 90-day investment horizon Las Vegas Sands is expected to generate 0.91 times more return on investment than Sands China. However, Las Vegas Sands is 1.1 times less risky than Sands China. It trades about 0.3 of its potential returns per unit of risk. Sands China Ltd is currently generating about 0.23 per unit of risk. If you would invest  4,926  in Las Vegas Sands on September 13, 2024 and sell it today you would earn a total of  519.00  from holding Las Vegas Sands or generate 10.54% return on investment over 90 days.

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

Las Vegas Sands  vs.  Sands China Ltd

Las Vegas Sands

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Las Vegas Sands are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Las Vegas unveiled 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 Las Vegas and Sands China

The main advantage of trading using opposite Las Vegas and Sands China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas 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 Las Vegas Sands 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.