Correlation Between San Fu and Hang Seng
Can any of the company-specific risk be diversified away by investing in both San Fu and Hang Seng 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 San Fu and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Fu Chemical and Hang Seng Bank, you can compare the effects of market volatilities on San Fu and Hang Seng 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 San Fu with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and Hang Seng.
Diversification Opportunities for San Fu and Hang Seng
Good diversification
The 3 months correlation between San and Hang is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank and San Fu 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 San Fu Chemical are associated (or correlated) with Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of San Fu i.e., San Fu and Hang Seng go up and down completely randomly.
Pair Corralation between San Fu and Hang Seng
Assuming the 90 days trading horizon San Fu Chemical is expected to under-perform the Hang Seng. But the stock apears to be less risky and, when comparing its historical volatility, San Fu Chemical is 1.14 times less risky than Hang Seng. The stock trades about 0.0 of its potential returns per unit of risk. The Hang Seng Bank is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 965.00 in Hang Seng Bank on August 26, 2024 and sell it today you would earn a total of 240.00 from holding Hang Seng Bank or generate 24.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.31% |
| Values | Daily Returns |
San Fu Chemical vs. Hang Seng Bank
Performance |
| Timeline |
| San Fu Chemical |
| Hang Seng Bank |
San Fu and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Fu and Hang Seng
The main advantage of trading using opposite San Fu and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng's long position.| San Fu vs. Delta Electronics | San Fu vs. China Steel Chemical | San Fu vs. Hota Industrial Mfg | San Fu vs. Ruentex Development Co |
| Hang Seng vs. Permanent TSB Group | Hang Seng vs. Japan Post Holdings | Hang Seng vs. Commercial International Bank | Hang Seng vs. Kasikornbank Public 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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