Correlation Between Sun Hung and Harbor Custom

Can any of the company-specific risk be diversified away by investing in both Sun Hung and Harbor Custom 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 Harbor Custom 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 Harbor Custom Development, you can compare the effects of market volatilities on Sun Hung and Harbor Custom 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 Harbor Custom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Hung and Harbor Custom.

Diversification Opportunities for Sun Hung and Harbor Custom

0.62

Correlation Coefficient

Sun Hung  Harbor Custom

Poor diversification

The 3 months correlation between Sun and Harbor is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Harbor Custom Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Custom Development 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 Harbor Custom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Custom Development has no effect on the direction of Sun Hung i.e., Sun Hung and Harbor Custom go up and down completely randomly.

Pair Corralation between Sun Hung and Harbor Custom

If you would invest  957.00  in Sun Hung Kai on August 31, 2024 and sell it today you would earn a total of  63.00  from holding Sun Hung Kai or generate 6.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.64%
Values	Daily Returns

Sun Hung Kai  vs.  Harbor Custom Development

Sun Hung Kai

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Hung Kai are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, Sun Hung may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Harbor Custom Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbor Custom Development has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Harbor Custom is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sun Hung and Harbor Custom

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

The idea behind Sun Hung Kai and Harbor Custom Development 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.