Correlation Between Hung Sheng and Simplo Technology
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Simplo Technology 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 Simplo Technology 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 Simplo Technology Co, you can compare the effects of market volatilities on Hung Sheng and Simplo Technology 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 Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Simplo Technology.
Diversification Opportunities for Hung Sheng and Simplo Technology
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hung and Simplo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of Hung Sheng i.e., Hung Sheng and Simplo Technology go up and down completely randomly.
Pair Corralation between Hung Sheng and Simplo Technology
Assuming the 90 days trading horizon Hung Sheng is expected to generate 3.51 times less return on investment than Simplo Technology. But when comparing it to its historical volatility, Hung Sheng Construction is 1.69 times less risky than Simplo Technology. It trades about 0.08 of its potential returns per unit of risk. Simplo Technology Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 34,250 in Simplo Technology Co on August 30, 2024 and sell it today you would earn a total of 3,400 from holding Simplo Technology Co or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Simplo Technology Co
Performance |
| Timeline |
| Hung Sheng Construction |
| Simplo Technology |
Hung Sheng and Simplo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Simplo Technology
The main advantage of trading using opposite Hung Sheng and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Simplo Technology 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 Simplo Technology will offset losses from the drop in Simplo Technology's long position.| Hung Sheng vs. Tainan Spinning Co | Hung Sheng vs. Carnival Industrial Corp | Hung Sheng vs. Symtek Automation Asia | Hung Sheng vs. CTCI Corp |
| Simplo Technology vs. Dynapack International Technology | Simplo Technology vs. Catcher Technology Co | Simplo Technology vs. Delta Electronics | Simplo Technology vs. Powertech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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