Correlation Between Hung Sheng and AVY Precision
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and AVY Precision 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 AVY Precision 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 AVY Precision Technology, you can compare the effects of market volatilities on Hung Sheng and AVY Precision 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 AVY Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and AVY Precision.
Diversification Opportunities for Hung Sheng and AVY Precision
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hung and AVY is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and AVY Precision Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVY Precision Technology 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 AVY Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVY Precision Technology has no effect on the direction of Hung Sheng i.e., Hung Sheng and AVY Precision go up and down completely randomly.
Pair Corralation between Hung Sheng and AVY Precision
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.92 times more return on investment than AVY Precision. However, Hung Sheng Construction is 1.08 times less risky than AVY Precision. It trades about 0.14 of its potential returns per unit of risk. AVY Precision Technology is currently generating about -0.18 per unit of risk. If you would invest 2,565 in Hung Sheng Construction on September 4, 2024 and sell it today you would earn a total of 125.00 from holding Hung Sheng Construction or generate 4.87% 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. AVY Precision Technology
Performance |
| Timeline |
| Hung Sheng Construction |
| AVY Precision Technology |
Hung Sheng and AVY Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and AVY Precision
The main advantage of trading using opposite Hung Sheng and AVY Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, AVY Precision 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 AVY Precision will offset losses from the drop in AVY Precision'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 |
| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Kaulin Mfg |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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