Correlation Between Hung Sheng and Tong Tai
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Tong Tai 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 Tong Tai 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 Tong Tai Machine Tool, you can compare the effects of market volatilities on Hung Sheng and Tong Tai 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 Tong Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Tong Tai.
Diversification Opportunities for Hung Sheng and Tong Tai
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hung and Tong is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Tong Tai Machine Tool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Tai Machine 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 Tong Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Tai Machine has no effect on the direction of Hung Sheng i.e., Hung Sheng and Tong Tai go up and down completely randomly.
Pair Corralation between Hung Sheng and Tong Tai
Assuming the 90 days trading horizon Hung Sheng is expected to generate 9.82 times less return on investment than Tong Tai. But when comparing it to its historical volatility, Hung Sheng Construction is 1.93 times less risky than Tong Tai. It trades about 0.01 of its potential returns per unit of risk. Tong Tai Machine Tool is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,460 in Tong Tai Machine Tool on September 2, 2024 and sell it today you would earn a total of 1,790 from holding Tong Tai Machine Tool or generate 122.6% 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. Tong Tai Machine Tool
Performance |
| Timeline |
| Hung Sheng Construction |
| Tong Tai Machine |
Hung Sheng and Tong Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Tong Tai
The main advantage of trading using opposite Hung Sheng and Tong Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Tong Tai 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 Tong Tai will offset losses from the drop in Tong Tai'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 |
| Tong Tai vs. Kaulin Mfg | Tong Tai vs. Nien Hsing Textile | Tong Tai vs. Awea Mechantronic Co | Tong Tai vs. Min Aik Technology |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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