Correlation Between UDR and Sun Hung
Can any of the company-specific risk be diversified away by investing in both UDR 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 UDR and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UDR Inc and Sun Hung Kai, you can compare the effects of market volatilities on UDR 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 UDR with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and Sun Hung.
Diversification Opportunities for UDR and Sun Hung
Very poor diversification
The 3 months correlation between UDR and Sun is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc 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 UDR 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 UDR Inc 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 UDR i.e., UDR and Sun Hung go up and down completely randomly.
Pair Corralation between UDR and Sun Hung
Considering the 90-day investment horizon UDR Inc is expected to generate 0.88 times more return on investment than Sun Hung. However, UDR Inc is 1.14 times less risky than Sun Hung. It trades about 0.04 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.03 per unit of risk. If you would invest 3,698 in UDR Inc on December 1, 2024 and sell it today you would earn a total of 820.00 from holding UDR Inc or generate 22.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
UDR Inc vs. Sun Hung Kai
Performance |
Timeline |
UDR Inc |
Sun Hung Kai |
UDR and Sun Hung Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UDR and Sun Hung
The main advantage of trading using opposite UDR and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UDR 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.UDR vs. AvalonBay Communities | UDR vs. Essex Property Trust | UDR vs. Mid America Apartment Communities | UDR vs. Camden Property Trust |
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Check out your portfolio center.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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