Correlation Between Sun Hung and Wharf Holdings

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

Diversification Opportunities for Sun Hung and Wharf Holdings

0.38

Correlation Coefficient

Sun Hung  Wharf Holdings

Weak diversification

The 3 months correlation between Sun and Wharf is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sun Hung Kai and Wharf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Holdings 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 Wharf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Holdings has no effect on the direction of Sun Hung i.e., Sun Hung and Wharf Holdings go up and down completely randomly.

Pair Corralation between Sun Hung and Wharf Holdings

Assuming the 90 days horizon Sun Hung Kai is expected to generate 1.03 times more return on investment than Wharf Holdings. However, Sun Hung is 1.03 times more volatile than Wharf Holdings. It trades about 0.05 of its potential returns per unit of risk. Wharf Holdings is currently generating about 0.02 per unit of risk. If you would invest  957.00  in Sun Hung Kai on September 3, 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	Very Weak
Accuracy	96.88%
Values	Daily Returns

Sun Hung Kai  vs.  Wharf Holdings

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 January 2025.

Wharf Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wharf Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Wharf Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sun Hung and Wharf Holdings

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

The idea behind Sun Hung Kai and Wharf Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.