Correlation Between ZongTai Real and Hung Ching
Can any of the company-specific risk be diversified away by investing in both ZongTai Real and Hung Ching 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 ZongTai Real and Hung Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZongTai Real Estate and Hung Ching Development, you can compare the effects of market volatilities on ZongTai Real and Hung Ching 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 ZongTai Real with a short position of Hung Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZongTai Real and Hung Ching.
Diversification Opportunities for ZongTai Real and Hung Ching
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZongTai and Hung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ZongTai Real Estate and Hung Ching Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Ching Development and ZongTai Real 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 ZongTai Real Estate are associated (or correlated) with Hung Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Ching Development has no effect on the direction of ZongTai Real i.e., ZongTai Real and Hung Ching go up and down completely randomly.
Pair Corralation between ZongTai Real and Hung Ching
Assuming the 90 days trading horizon ZongTai Real is expected to generate 1.66 times less return on investment than Hung Ching. But when comparing it to its historical volatility, ZongTai Real Estate is 1.1 times less risky than Hung Ching. It trades about 0.26 of its potential returns per unit of risk. Hung Ching Development is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 3,220 in Hung Ching Development on August 31, 2024 and sell it today you would earn a total of 560.00 from holding Hung Ching Development or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZongTai Real Estate vs. Hung Ching Development
Performance |
| Timeline |
| ZongTai Real Estate |
| Hung Ching Development |
ZongTai Real and Hung Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZongTai Real and Hung Ching
The main advantage of trading using opposite ZongTai Real and Hung Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZongTai Real position performs unexpectedly, Hung Ching 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 Hung Ching will offset losses from the drop in Hung Ching's long position.| ZongTai Real vs. Tainet Communication System | ZongTai Real vs. Arima Communications Corp | ZongTai Real vs. PChome Online | ZongTai Real vs. GAME HOURS |
| Hung Ching vs. Ruentex Development Co | Hung Ching vs. CTCI Corp | Hung Ching vs. Information Technology Total | Hung Ching vs. Ennoconn 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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