Correlation Between Hung Sheng and Leatec Fine
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Leatec Fine 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 Leatec Fine 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 Leatec Fine Ceramics, you can compare the effects of market volatilities on Hung Sheng and Leatec Fine 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 Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Leatec Fine.
Diversification Opportunities for Hung Sheng and Leatec Fine
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hung and Leatec is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics 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 Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of Hung Sheng i.e., Hung Sheng and Leatec Fine go up and down completely randomly.
Pair Corralation between Hung Sheng and Leatec Fine
Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.78 times more return on investment than Leatec Fine. However, Hung Sheng Construction is 1.28 times less risky than Leatec Fine. It trades about 0.06 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about 0.05 per unit of risk. If you would invest 2,615 in Hung Sheng Construction on August 31, 2024 and sell it today you would earn a total of 55.00 from holding Hung Sheng Construction or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hung Sheng Construction vs. Leatec Fine Ceramics
Performance |
| Timeline |
| Hung Sheng Construction |
| Leatec Fine Ceramics |
Hung Sheng and Leatec Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Leatec Fine
The main advantage of trading using opposite Hung Sheng and Leatec Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Leatec Fine 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 Leatec Fine will offset losses from the drop in Leatec Fine's long position.| Hung Sheng vs. Huaku Development Co | Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total |
| Leatec Fine vs. Hung Sheng Construction | Leatec Fine vs. Silicon Power Computer | Leatec Fine vs. Qualipoly Chemical Corp | Leatec Fine vs. Chi Sheng Chemical |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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