Correlation Between Shining Building and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Shining Building and Hung Sheng 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 Shining Building and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shining Building Business and Hung Sheng Construction, you can compare the effects of market volatilities on Shining Building and Hung Sheng 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 Shining Building with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shining Building and Hung Sheng.
Diversification Opportunities for Shining Building and Hung Sheng
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shining and Hung is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shining Building Business and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction and Shining Building 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 Shining Building Business are associated (or correlated) with Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Shining Building i.e., Shining Building and Hung Sheng go up and down completely randomly.
Pair Corralation between Shining Building and Hung Sheng
Assuming the 90 days trading horizon Shining Building Business is expected to generate 1.19 times more return on investment than Hung Sheng. However, Shining Building is 1.19 times more volatile than Hung Sheng Construction. It trades about -0.02 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about -0.08 per unit of risk. If you would invest 1,140 in Shining Building Business on October 26, 2024 and sell it today you would lose (95.00) from holding Shining Building Business or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shining Building Business vs. Hung Sheng Construction
Performance |
| Timeline |
| Shining Building Business |
| Hung Sheng Construction |
Shining Building and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shining Building and Hung Sheng
The main advantage of trading using opposite Shining Building and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shining Building position performs unexpectedly, Hung Sheng 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 Sheng will offset losses from the drop in Hung Sheng's long position.| Shining Building vs. Farglory Land Development | Shining Building vs. Radium Life Tech | Shining Building vs. Huaku Development Co | Shining Building vs. Chong Hong Construction |
| Hung Sheng vs. Shining Building Business | Hung Sheng vs. Chong Hong Construction | Hung Sheng vs. Farglory Land Development | Hung Sheng vs. Sweeten Real Estate |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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