Correlation Between Shangri La and Ho Hup
Can any of the company-specific risk be diversified away by investing in both Shangri La and Ho Hup 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 Shangri La and Ho Hup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Hotels and Ho Hup Construction, you can compare the effects of market volatilities on Shangri La and Ho Hup 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 Shangri La with a short position of Ho Hup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Ho Hup.
Diversification Opportunities for Shangri La and Ho Hup
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shangri and 5169 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and Ho Hup Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Hup Construction and Shangri La 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 Shangri La Hotels are associated (or correlated) with Ho Hup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Hup Construction has no effect on the direction of Shangri La i.e., Shangri La and Ho Hup go up and down completely randomly.
Pair Corralation between Shangri La and Ho Hup
Assuming the 90 days trading horizon Shangri La Hotels is expected to under-perform the Ho Hup. But the stock apears to be less risky and, when comparing its historical volatility, Shangri La Hotels is 2.28 times less risky than Ho Hup. The stock trades about -0.05 of its potential returns per unit of risk. The Ho Hup Construction is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Ho Hup Construction on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Ho Hup Construction or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shangri La Hotels vs. Ho Hup Construction
Performance |
| Timeline |
| Shangri La Hotels |
| Ho Hup Construction |
Shangri La and Ho Hup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and Ho Hup
The main advantage of trading using opposite Shangri La and Ho Hup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, Ho Hup 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 Ho Hup will offset losses from the drop in Ho Hup's long position.The idea behind Shangri La Hotels and Ho Hup Construction 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.| Ho Hup vs. PMB Technology Bhd | Ho Hup vs. Cloudpoint Technology Berhad | Ho Hup vs. JF Technology BHD | Ho Hup vs. Coraza Integrated Technology |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |