Correlation Between Hung Sheng and Nan Pao
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Nan Pao 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 Nan Pao 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 Nan Pao Resins, you can compare the effects of market volatilities on Hung Sheng and Nan Pao 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 Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Nan Pao.
Diversification Opportunities for Hung Sheng and Nan Pao
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hung and Nan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins 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 Nan Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of Hung Sheng i.e., Hung Sheng and Nan Pao go up and down completely randomly.
Pair Corralation between Hung Sheng and Nan Pao
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.86 times more return on investment than Nan Pao. However, Hung Sheng Construction is 1.16 times less risky than Nan Pao. It trades about 0.0 of its potential returns per unit of risk. Nan Pao Resins is currently generating about 0.0 per unit of risk. If you would invest 2,750 in Hung Sheng Construction on September 3, 2024 and sell it today you would lose (60.00) from holding Hung Sheng Construction or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Nan Pao Resins
Performance |
| Timeline |
| Hung Sheng Construction |
| Nan Pao Resins |
Hung Sheng and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Nan Pao
The main advantage of trading using opposite Hung Sheng and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Nan Pao 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 Nan Pao will offset losses from the drop in Nan Pao'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 |
| Nan Pao vs. Hunya Foods Co | Nan Pao vs. Cameo Communications | Nan Pao vs. BenQ Materials Corp | Nan Pao vs. Advanced Echem Materials |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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