Correlation Between Hung Sheng and Huaku Development
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Huaku Development 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 Huaku Development 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 Huaku Development Co, you can compare the effects of market volatilities on Hung Sheng and Huaku Development 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 Huaku Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Huaku Development.
Diversification Opportunities for Hung Sheng and Huaku Development
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hung and Huaku is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Huaku Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaku 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 Huaku Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaku Development has no effect on the direction of Hung Sheng i.e., Hung Sheng and Huaku Development go up and down completely randomly.
Pair Corralation between Hung Sheng and Huaku Development
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.7 times more return on investment than Huaku Development. However, Hung Sheng Construction is 1.43 times less risky than Huaku Development. It trades about 0.14 of its potential returns per unit of risk. Huaku Development Co is currently generating about 0.04 per unit of risk. If you would invest 2,565 in Hung Sheng Construction on September 4, 2024 and sell it today you would earn a total of 125.00 from holding Hung Sheng Construction or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Huaku Development Co
Performance |
| Timeline |
| Hung Sheng Construction |
| Huaku Development |
Hung Sheng and Huaku Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Huaku Development
The main advantage of trading using opposite Hung Sheng and Huaku Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Huaku Development 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 Huaku Development will offset losses from the drop in Huaku Development's long position.| Hung Sheng vs. Huaku Development Co | Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. Taiwan Cement Corp | Hung Sheng vs. Symtek Automation Asia |
| Huaku Development vs. Chong Hong Construction | Huaku Development vs. Highwealth Construction Corp | Huaku Development vs. Fubon Financial Holding | Huaku Development vs. CTBC Financial Holding |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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