Correlation Between Hung Sheng and Trade Van
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Trade Van 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 Trade Van 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 Trade Van Information Services, you can compare the effects of market volatilities on Hung Sheng and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Trade Van.
Diversification Opportunities for Hung Sheng and Trade Van
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hung and Trade is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of Hung Sheng i.e., Hung Sheng and Trade Van go up and down completely randomly.
Pair Corralation between Hung Sheng and Trade Van
Assuming the 90 days trading horizon Hung Sheng is expected to generate 1.46 times less return on investment than Trade Van. In addition to that, Hung Sheng is 1.39 times more volatile than Trade Van Information Services. It trades about 0.08 of its total potential returns per unit of risk. Trade Van Information Services is currently generating about 0.16 per unit of volatility. If you would invest 7,810 in Trade Van Information Services on August 30, 2024 and sell it today you would earn a total of 330.00 from holding Trade Van Information Services or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. Trade Van Information Services
Performance |
| Timeline |
| Hung Sheng Construction |
| Trade Van Information |
Hung Sheng and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and Trade Van
The main advantage of trading using opposite Hung Sheng and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van'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 |
| Trade Van vs. Taiwan Sakura Corp | Trade Van vs. Charoen Pokphand Enterprise | Trade Van vs. Taiwan Cogeneration Corp | Trade Van vs. Taiwan Secom Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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