Correlation Between Mitsui Fudosan and Sun Hung

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

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

Diversification Opportunities for Mitsui Fudosan and Sun Hung

-0.32

Correlation Coefficient

Mitsui Fudosan  Sun Hung

Very good diversification

The 3 months correlation between Mitsui and Sun is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Fudosan Co 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 Mitsui Fudosan 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 Mitsui Fudosan Co 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 Mitsui Fudosan i.e., Mitsui Fudosan and Sun Hung go up and down completely randomly.

Pair Corralation between Mitsui Fudosan and Sun Hung

Assuming the 90 days horizon Mitsui Fudosan Co is expected to generate 1.29 times more return on investment than Sun Hung. However, Mitsui Fudosan is 1.29 times more volatile than Sun Hung Kai. It trades about 0.13 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.02 per unit of risk. If you would invest  760.00  in Mitsui Fudosan Co on December 28, 2024 and sell it today you would earn a total of  105.00  from holding Mitsui Fudosan Co or generate 13.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Mitsui Fudosan Co  vs.  Sun Hung Kai

Mitsui Fudosan

Risk-Adjusted Performance

OK

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

Sun Hung Kai

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Hung Kai has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sun Hung is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui Fudosan and Sun Hung

The main advantage of trading using opposite Mitsui Fudosan and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui Fudosan 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 Mitsui Fudosan Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.