Correlation Between Hung Sheng and Cathay Real
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Cathay Real 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 Hung Sheng and Cathay Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hung Sheng Construction and Cathay Real Estate, you can compare the effects of market volatilities on Hung Sheng and Cathay Real 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 Hung Sheng with a short position of Cathay Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Cathay Real.
Diversification Opportunities for Hung Sheng and Cathay Real
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hung and Cathay is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Cathay Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Real Estate and Hung Sheng 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 Hung Sheng Construction are associated (or correlated) with Cathay Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Real Estate has no effect on the direction of Hung Sheng i.e., Hung Sheng and Cathay Real go up and down completely randomly.
Pair Corralation between Hung Sheng and Cathay Real
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.76 times more return on investment than Cathay Real. However, Hung Sheng Construction is 1.31 times less risky than Cathay Real. It trades about -0.01 of its potential returns per unit of risk. Cathay Real Estate is currently generating about -0.11 per unit of risk. If you would invest 2,785 in Hung Sheng Construction on September 5, 2024 and sell it today you would lose (105.00) from holding Hung Sheng Construction or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Cathay Real Estate
Performance |
| Timeline |
| Hung Sheng Construction |
| Cathay Real Estate |
Hung Sheng and Cathay Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Cathay Real
The main advantage of trading using opposite Hung Sheng and Cathay Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Cathay Real 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 Cathay Real will offset losses from the drop in Cathay Real's long position.| Hung Sheng vs. Chainqui Construction Development | Hung Sheng vs. Kee Tai Properties | Hung Sheng vs. BES Engineering Co | Hung Sheng vs. Zinwell |
| Cathay Real vs. Huaku Development Co | Cathay Real vs. Ruentex Development Co | Cathay Real vs. Taiwan Cement Corp | Cathay Real vs. Symtek Automation Asia |
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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