Correlation Between Ucommune International and Sunstone Hotel

Can any of the company-specific risk be diversified away by investing in both Ucommune International and Sunstone Hotel 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 Ucommune International and Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ucommune International and Sunstone Hotel Investors, you can compare the effects of market volatilities on Ucommune International and Sunstone Hotel 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 Ucommune International with a short position of Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ucommune International and Sunstone Hotel.

Diversification Opportunities for Ucommune International and Sunstone Hotel

0.58

Correlation Coefficient

Ucommune International  Sunstone Hotel

Very weak diversification

The 3 months correlation between Ucommune and Sunstone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ucommune International and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors and Ucommune International 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 Ucommune International are associated (or correlated) with Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of Ucommune International i.e., Ucommune International and Sunstone Hotel go up and down completely randomly.

Pair Corralation between Ucommune International and Sunstone Hotel

Allowing for the 90-day total investment horizon Ucommune International is expected to generate 3.16 times more return on investment than Sunstone Hotel. However, Ucommune International is 3.16 times more volatile than Sunstone Hotel Investors. It trades about 0.01 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about -0.12 per unit of risk. If you would invest  114.00  in Ucommune International on December 30, 2024 and sell it today you would lose (1.00) from holding Ucommune International or give up 0.88% of portfolio value over 90 days.

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

Ucommune International  vs.  Sunstone Hotel Investors

Ucommune International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ucommune International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ucommune International is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Sunstone Hotel Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunstone Hotel Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Ucommune International and Sunstone Hotel

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

The idea behind Ucommune International and Sunstone Hotel Investors 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.