Correlation Between Sun Hung and PUBLIC STORAGE

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

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

Diversification Opportunities for Sun Hung and PUBLIC STORAGE

0.26

Correlation Coefficient

Sun Hung  PUBLIC STORAGE

Modest diversification

The 3 months correlation between Sun and PUBLIC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and PUBLIC STORAGE PRFO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUBLIC STORAGE PRFO and Sun Hung 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 Sun Hung Kai are associated (or correlated) with PUBLIC STORAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PUBLIC STORAGE PRFO has no effect on the direction of Sun Hung i.e., Sun Hung and PUBLIC STORAGE go up and down completely randomly.

Pair Corralation between Sun Hung and PUBLIC STORAGE

Assuming the 90 days horizon Sun Hung Kai is expected to generate 3.03 times more return on investment than PUBLIC STORAGE. However, Sun Hung is 3.03 times more volatile than PUBLIC STORAGE PRFO. It trades about 0.06 of its potential returns per unit of risk. PUBLIC STORAGE PRFO is currently generating about 0.03 per unit of risk. If you would invest  450.00  in Sun Hung Kai on September 2, 2024 and sell it today you would earn a total of  480.00  from holding Sun Hung Kai or generate 106.67% return on investment over 90 days.

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

Sun Hung Kai  vs.  PUBLIC STORAGE PRFO

Sun Hung Kai

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Hung Kai are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sun Hung reported solid returns over the last few months and may actually be approaching a breakup point.

PUBLIC STORAGE PRFO

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PUBLIC STORAGE PRFO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PUBLIC STORAGE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sun Hung and PUBLIC STORAGE

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

The idea behind Sun Hung Kai and PUBLIC STORAGE PRFO 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.