Correlation Between Hung Sheng and Wan Hai
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Wan Hai 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 Wan Hai 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 Wan Hai Lines, you can compare the effects of market volatilities on Hung Sheng and Wan Hai 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 Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Wan Hai.
Diversification Opportunities for Hung Sheng and Wan Hai
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hung and Wan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines 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 Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of Hung Sheng i.e., Hung Sheng and Wan Hai go up and down completely randomly.
Pair Corralation between Hung Sheng and Wan Hai
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.5 times more return on investment than Wan Hai. However, Hung Sheng Construction is 1.99 times less risky than Wan Hai. It trades about 0.09 of its potential returns per unit of risk. Wan Hai Lines is currently generating about -0.03 per unit of risk. If you would invest 2,615 in Hung Sheng Construction on September 1, 2024 and sell it today you would earn a total of 80.00 from holding Hung Sheng Construction or generate 3.06% 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. Wan Hai Lines
Performance |
| Timeline |
| Hung Sheng Construction |
| Wan Hai Lines |
Hung Sheng and Wan Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Wan Hai
The main advantage of trading using opposite Hung Sheng and Wan Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Wan Hai 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 Wan Hai will offset losses from the drop in Wan Hai's long position.| Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total | Hung Sheng vs. Ennoconn Corp |
| Wan Hai vs. BES Engineering Co | Wan Hai vs. Continental Holdings Corp | Wan Hai vs. Kee Tai Properties | Wan Hai vs. Hung Sheng Construction |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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