Correlation Between Hung Sheng and Highwealth Construction
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Highwealth Construction 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 Highwealth Construction 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 Highwealth Construction Corp, you can compare the effects of market volatilities on Hung Sheng and Highwealth Construction 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 Highwealth Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Highwealth Construction.
Diversification Opportunities for Hung Sheng and Highwealth Construction
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hung and Highwealth is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Highwealth Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwealth Construction 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 Highwealth Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwealth Construction has no effect on the direction of Hung Sheng i.e., Hung Sheng and Highwealth Construction go up and down completely randomly.
Pair Corralation between Hung Sheng and Highwealth Construction
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.82 times more return on investment than Highwealth Construction. However, Hung Sheng Construction is 1.22 times less risky than Highwealth Construction. It trades about 0.04 of its potential returns per unit of risk. Highwealth Construction Corp is currently generating about 0.02 per unit of risk. If you would invest 2,280 in Hung Sheng Construction on August 29, 2024 and sell it today you would earn a total of 435.00 from holding Hung Sheng Construction or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Highwealth Construction Corp
Performance |
| Timeline |
| Hung Sheng Construction |
| Highwealth Construction |
Hung Sheng and Highwealth Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Highwealth Construction
The main advantage of trading using opposite Hung Sheng and Highwealth Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Highwealth Construction 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 Highwealth Construction will offset losses from the drop in Highwealth Construction's long position.| Hung Sheng vs. Chainqui Construction Development | Hung Sheng vs. Zinwell | Hung Sheng vs. Symtek Automation Asia | Hung Sheng vs. CTCI Corp |
| Highwealth Construction vs. Chainqui Construction Development | Highwealth Construction vs. Zinwell | Highwealth Construction vs. Symtek Automation Asia | Highwealth Construction vs. CTCI 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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