Correlation Between Carnival Industrial and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Carnival Industrial 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 Carnival Industrial and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnival Industrial Corp and Hung Sheng Construction, you can compare the effects of market volatilities on Carnival Industrial 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 Carnival Industrial with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnival Industrial and Hung Sheng.
Diversification Opportunities for Carnival Industrial and Hung Sheng
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carnival and Hung is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Carnival Industrial Corp 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 Carnival Industrial 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 Carnival Industrial Corp 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 Carnival Industrial i.e., Carnival Industrial and Hung Sheng go up and down completely randomly.
Pair Corralation between Carnival Industrial and Hung Sheng
Assuming the 90 days trading horizon Carnival Industrial Corp is expected to under-perform the Hung Sheng. But the stock apears to be less risky and, when comparing its historical volatility, Carnival Industrial Corp is 2.56 times less risky than Hung Sheng. The stock trades about -0.05 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnival Industrial Corp vs. Hung Sheng Construction
Performance |
| Timeline |
| Carnival Industrial Corp |
| Hung Sheng Construction |
Carnival Industrial and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnival Industrial and Hung Sheng
The main advantage of trading using opposite Carnival Industrial and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnival Industrial 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.| Carnival Industrial vs. Chaintech Technology Corp | Carnival Industrial vs. AVerMedia Technologies | Carnival Industrial vs. Avision | Carnival Industrial vs. Clevo 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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