Correlation Between Hung Sheng and Hung Ching
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Hung Ching 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 Hung Ching 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 Hung Ching Development, you can compare the effects of market volatilities on Hung Sheng and Hung Ching 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 Hung Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Hung Ching.
Diversification Opportunities for Hung Sheng and Hung Ching
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hung and Hung is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Hung Ching Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Ching Development 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 Hung Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Ching Development has no effect on the direction of Hung Sheng i.e., Hung Sheng and Hung Ching go up and down completely randomly.
Pair Corralation between Hung Sheng and Hung Ching
Assuming the 90 days trading horizon Hung Sheng is expected to generate 1.34 times less return on investment than Hung Ching. But when comparing it to its historical volatility, Hung Sheng Construction is 1.65 times less risky than Hung Ching. It trades about 0.07 of its potential returns per unit of risk. Hung Ching Development is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,810 in Hung Ching Development on September 5, 2024 and sell it today you would earn a total of 1,015 from holding Hung Ching Development or generate 36.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Hung Ching Development
Performance |
| Timeline |
| Hung Sheng Construction |
| Hung Ching Development |
Hung Sheng and Hung Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Hung Ching
The main advantage of trading using opposite Hung Sheng and Hung Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Hung Ching 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 Ching will offset losses from the drop in Hung Ching'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 |
| Hung Ching vs. Huaku Development Co | Hung Ching vs. Ruentex Development Co | Hung Ching vs. Taiwan Cement Corp | Hung Ching 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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