Correlation Between Hung Sheng and YungShin Global
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and YungShin Global 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 YungShin Global 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 YungShin Global Holding, you can compare the effects of market volatilities on Hung Sheng and YungShin Global 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 YungShin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and YungShin Global.
Diversification Opportunities for Hung Sheng and YungShin Global
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hung and YungShin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and YungShin Global Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YungShin Global Holding 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 YungShin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YungShin Global Holding has no effect on the direction of Hung Sheng i.e., Hung Sheng and YungShin Global go up and down completely randomly.
Pair Corralation between Hung Sheng and YungShin Global
Assuming the 90 days trading horizon Hung Sheng Construction is expected to under-perform the YungShin Global. In addition to that, Hung Sheng is 5.01 times more volatile than YungShin Global Holding. It trades about -0.18 of its total potential returns per unit of risk. YungShin Global Holding is currently generating about -0.3 per unit of volatility. If you would invest 5,390 in YungShin Global Holding on November 2, 2024 and sell it today you would lose (120.00) from holding YungShin Global Holding or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. YungShin Global Holding
Performance |
| Timeline |
| Hung Sheng Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| YungShin Global Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hung Sheng and YungShin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and YungShin Global
The main advantage of trading using opposite Hung Sheng and YungShin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, YungShin Global 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 YungShin Global will offset losses from the drop in YungShin Global's long position.The idea behind Hung Sheng Construction and YungShin Global Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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