Correlation Between Ho Hup and Sunzen Biotech
Can any of the company-specific risk be diversified away by investing in both Ho Hup and Sunzen Biotech 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 Ho Hup and Sunzen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ho Hup Construction and Sunzen Biotech Bhd, you can compare the effects of market volatilities on Ho Hup and Sunzen Biotech 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 Ho Hup with a short position of Sunzen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ho Hup and Sunzen Biotech.
Diversification Opportunities for Ho Hup and Sunzen Biotech
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 5169 and Sunzen is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ho Hup Construction and Sunzen Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunzen Biotech Bhd and Ho Hup 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 Ho Hup Construction are associated (or correlated) with Sunzen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunzen Biotech Bhd has no effect on the direction of Ho Hup i.e., Ho Hup and Sunzen Biotech go up and down completely randomly.
Pair Corralation between Ho Hup and Sunzen Biotech
Assuming the 90 days trading horizon Ho Hup Construction is expected to generate 5.75 times more return on investment than Sunzen Biotech. However, Ho Hup is 5.75 times more volatile than Sunzen Biotech Bhd. It trades about 0.11 of its potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about 0.0 per unit of risk. If you would invest 17.00 in Ho Hup Construction on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Ho Hup Construction or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ho Hup Construction vs. Sunzen Biotech Bhd
Performance |
| Timeline |
| Ho Hup Construction |
| Sunzen Biotech Bhd |
Ho Hup and Sunzen Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ho Hup and Sunzen Biotech
The main advantage of trading using opposite Ho Hup and Sunzen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ho Hup position performs unexpectedly, Sunzen Biotech 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 Sunzen Biotech will offset losses from the drop in Sunzen Biotech's long position.The idea behind Ho Hup Construction and Sunzen Biotech Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sunzen Biotech vs. Silver Ridge Holdings | Sunzen Biotech vs. Kossan Rubber Industries | Sunzen Biotech vs. Malaysia Steel Works | Sunzen Biotech vs. Southern Steel Bhd |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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