Correlation Between EA Technique and Hong Leong
Can any of the company-specific risk be diversified away by investing in both EA Technique and Hong Leong 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 EA Technique and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EA Technique M and Hong Leong Bank, you can compare the effects of market volatilities on EA Technique and Hong Leong 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 EA Technique with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Technique and Hong Leong.
Diversification Opportunities for EA Technique and Hong Leong
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 5259 and Hong is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding EA Technique M and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank and EA Technique 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 EA Technique M are associated (or correlated) with Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of EA Technique i.e., EA Technique and Hong Leong go up and down completely randomly.
Pair Corralation between EA Technique and Hong Leong
Assuming the 90 days trading horizon EA Technique is expected to generate 1.25 times less return on investment than Hong Leong. In addition to that, EA Technique is 2.33 times more volatile than Hong Leong Bank. It trades about 0.01 of its total potential returns per unit of risk. Hong Leong Bank is currently generating about 0.03 per unit of volatility. If you would invest 2,067 in Hong Leong Bank on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Hong Leong Bank or generate 1.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EA Technique M vs. Hong Leong Bank
Performance |
| Timeline |
| EA Technique M |
| Hong Leong Bank |
EA Technique and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Technique and Hong Leong
The main advantage of trading using opposite EA Technique and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Technique position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong's long position.| EA Technique vs. HeiTech Padu Bhd | EA Technique vs. Lysaght Galvanized Steel | EA Technique vs. Digistar Bhd | EA Technique vs. Swift Haulage Bhd |
| Hong Leong vs. Homeritz Bhd | Hong Leong vs. Sports Toto Berhad | Hong Leong vs. SSF Home Group | Hong Leong vs. Public Bank 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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