Correlation Between China Construction and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both China Construction and Hung Sheng 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 China Construction and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Construction Bank and Hung Sheng Construction, you can compare the effects of market volatilities on China Construction and Hung Sheng 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 China Construction with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Hung Sheng.
Diversification Opportunities for China Construction and Hung Sheng
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Hung is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction and China Construction 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 China Construction Bank are associated (or correlated) with Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of China Construction i.e., China Construction and Hung Sheng go up and down completely randomly.
Pair Corralation between China Construction and Hung Sheng
Assuming the 90 days trading horizon China Construction Bank is expected to under-perform the Hung Sheng. But the stock apears to be less risky and, when comparing its historical volatility, China Construction Bank is 3.06 times less risky than Hung Sheng. The stock trades about -0.13 of its potential returns per unit of risk. The Hung Sheng Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,615 in Hung Sheng Construction on September 1, 2024 and sell it today you would earn a total of 80.00 from holding Hung Sheng Construction or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Hung Sheng Construction
Performance |
| Timeline |
| China Construction Bank |
| Hung Sheng Construction |
China Construction and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Hung Sheng
The main advantage of trading using opposite China Construction and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Hung Sheng 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 Hung Sheng will offset losses from the drop in Hung Sheng's long position.| China Construction vs. Taiwan Semiconductor Manufacturing | China Construction vs. Hon Hai Precision | China Construction vs. MediaTek | China Construction vs. Chunghwa Telecom Co |
| Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total | Hung Sheng vs. Ennoconn Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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