Correlation Between Sun Hung and International Land

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

Diversification Opportunities for Sun Hung and International Land

-0.28

Correlation Coefficient

Sun Hung  International Land

Very good diversification

The 3 months correlation between Sun and International is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and International Land Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Land 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 International Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Land has no effect on the direction of Sun Hung i.e., Sun Hung and International Land go up and down completely randomly.

Pair Corralation between Sun Hung and International Land

Assuming the 90 days horizon Sun Hung is expected to generate 17.3 times less return on investment than International Land. But when comparing it to its historical volatility, Sun Hung Kai is 4.31 times less risky than International Land. It trades about 0.02 of its potential returns per unit of risk. International Land Alliance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8.50  in International Land Alliance on October 7, 2024 and sell it today you would earn a total of  3.50  from holding International Land Alliance or generate 41.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.44%
Values	Daily Returns

Sun Hung Kai  vs.  International Land Alliance

Sun Hung Kai

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

International Land

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Land Alliance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, International Land disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Hung and International Land

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

The idea behind Sun Hung Kai and International Land Alliance 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.