Correlation Between Hung Sheng and TWOWAY Communications
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and TWOWAY Communications 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 TWOWAY Communications 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 TWOWAY Communications, you can compare the effects of market volatilities on Hung Sheng and TWOWAY Communications 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 TWOWAY Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and TWOWAY Communications.
Diversification Opportunities for Hung Sheng and TWOWAY Communications
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hung and TWOWAY is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and TWOWAY Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TWOWAY Communications 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 TWOWAY Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TWOWAY Communications has no effect on the direction of Hung Sheng i.e., Hung Sheng and TWOWAY Communications go up and down completely randomly.
Pair Corralation between Hung Sheng and TWOWAY Communications
Assuming the 90 days trading horizon Hung Sheng is expected to generate 9.31 times less return on investment than TWOWAY Communications. But when comparing it to its historical volatility, Hung Sheng Construction is 2.57 times less risky than TWOWAY Communications. It trades about 0.03 of its potential returns per unit of risk. TWOWAY Communications is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,101 in TWOWAY Communications on September 12, 2024 and sell it today you would earn a total of 6,839 from holding TWOWAY Communications or generate 621.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hung Sheng Construction vs. TWOWAY Communications
Performance |
| Timeline |
| Hung Sheng Construction |
| TWOWAY Communications |
Hung Sheng and TWOWAY Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hung Sheng and TWOWAY Communications
The main advantage of trading using opposite Hung Sheng and TWOWAY Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, TWOWAY Communications 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 TWOWAY Communications will offset losses from the drop in TWOWAY Communications' long position.| Hung Sheng vs. Chong Hong Construction | Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. Symtek Automation Asia | Hung Sheng vs. WiseChip Semiconductor |
| TWOWAY Communications vs. Gemtek Technology Co | TWOWAY Communications vs. Ruentex Development Co | TWOWAY Communications vs. WiseChip Semiconductor | TWOWAY Communications vs. Novatek Microelectronics Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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