Correlation Between Southern Steel and Ho Hup
Can any of the company-specific risk be diversified away by investing in both Southern Steel 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 Southern Steel and Ho Hup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Steel Bhd and Ho Hup Construction, you can compare the effects of market volatilities on Southern Steel 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 Southern Steel with a short position of Ho Hup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and Ho Hup.
Diversification Opportunities for Southern Steel and Ho Hup
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and 5169 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd 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 Southern Steel 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 Southern Steel Bhd 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 Southern Steel i.e., Southern Steel and Ho Hup go up and down completely randomly.
Pair Corralation between Southern Steel and Ho Hup
Assuming the 90 days trading horizon Southern Steel Bhd is expected to under-perform the Ho Hup. But the stock apears to be less risky and, when comparing its historical volatility, Southern Steel Bhd is 2.01 times less risky than Ho Hup. The stock trades about -0.34 of its potential returns per unit of risk. The Ho Hup Construction is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Ho Hup Construction on November 29, 2024 and sell it today you would lose (1.00) from holding Ho Hup Construction or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Steel Bhd vs. Ho Hup Construction
Performance |
| Timeline |
| Southern Steel Bhd |
| Ho Hup Construction |
Southern Steel and Ho Hup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Steel and Ho Hup
The main advantage of trading using opposite Southern Steel and Ho Hup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Steel 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.| Southern Steel vs. ECM Libra Financial | Southern Steel vs. Hong Leong Bank | Southern Steel vs. CB Industrial Product | Southern Steel vs. YX Precious Metals |
| Ho Hup vs. Lysaght Galvanized Steel | Ho Hup vs. PMB Technology Bhd | Ho Hup vs. Cosmos Technology International | Ho Hup vs. YX Precious Metals |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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