Correlation Between Hung Sheng and U Ming
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and U Ming 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 U Ming 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 U Ming Marine Transport, you can compare the effects of market volatilities on Hung Sheng and U Ming 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 U Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and U Ming.
Diversification Opportunities for Hung Sheng and U Ming
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hung and 2606 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and U Ming Marine Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Ming Marine 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 U Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Ming Marine has no effect on the direction of Hung Sheng i.e., Hung Sheng and U Ming go up and down completely randomly.
Pair Corralation between Hung Sheng and U Ming
Assuming the 90 days trading horizon Hung Sheng is expected to generate 1.42 times less return on investment than U Ming. But when comparing it to its historical volatility, Hung Sheng Construction is 1.49 times less risky than U Ming. It trades about 0.03 of its potential returns per unit of risk. U Ming Marine Transport is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,905 in U Ming Marine Transport on September 3, 2024 and sell it today you would earn a total of 945.00 from holding U Ming Marine Transport or generate 19.27% 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. U Ming Marine Transport
Performance |
| Timeline |
| Hung Sheng Construction |
| U Ming Marine |
Hung Sheng and U Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and U Ming
The main advantage of trading using opposite Hung Sheng and U Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, U Ming 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 U Ming will offset losses from the drop in U Ming'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 |
| U Ming vs. Universal Microelectronics Co | U Ming vs. AVerMedia Technologies | U Ming vs. Symtek Automation Asia | U Ming vs. WiseChip Semiconductor |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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