Correlation Between Hung Sheng and FarGlory Hotel
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and FarGlory Hotel 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 FarGlory Hotel 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 FarGlory Hotel Co, you can compare the effects of market volatilities on Hung Sheng and FarGlory Hotel 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 FarGlory Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and FarGlory Hotel.
Diversification Opportunities for Hung Sheng and FarGlory Hotel
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hung and FarGlory is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and FarGlory Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarGlory Hotel 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 FarGlory Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarGlory Hotel has no effect on the direction of Hung Sheng i.e., Hung Sheng and FarGlory Hotel go up and down completely randomly.
Pair Corralation between Hung Sheng and FarGlory Hotel
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 1.05 times more return on investment than FarGlory Hotel. However, Hung Sheng is 1.05 times more volatile than FarGlory Hotel Co. It trades about 0.04 of its potential returns per unit of risk. FarGlory Hotel Co is currently generating about -0.08 per unit of risk. If you would invest 2,265 in Hung Sheng Construction on September 2, 2024 and sell it today you would earn a total of 430.00 from holding Hung Sheng Construction or generate 18.98% 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. FarGlory Hotel Co
Performance |
| Timeline |
| Hung Sheng Construction |
| FarGlory Hotel |
Hung Sheng and FarGlory Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and FarGlory Hotel
The main advantage of trading using opposite Hung Sheng and FarGlory Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, FarGlory Hotel 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 FarGlory Hotel will offset losses from the drop in FarGlory Hotel'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 |
| FarGlory Hotel vs. Ambassador Hotel | FarGlory Hotel vs. Lion Travel Service | FarGlory Hotel vs. Chateau International Development | FarGlory Hotel vs. First Hotel Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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