Correlation Between Hong Leong and Homeritz Bhd
Can any of the company-specific risk be diversified away by investing in both Hong Leong and Homeritz Bhd 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 Hong Leong and Homeritz Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Leong Bank and Homeritz Bhd, you can compare the effects of market volatilities on Hong Leong and Homeritz Bhd 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 Hong Leong with a short position of Homeritz Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Leong and Homeritz Bhd.
Diversification Opportunities for Hong Leong and Homeritz Bhd
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hong and Homeritz is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hong Leong Bank and Homeritz Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeritz Bhd and Hong Leong 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 Hong Leong Bank are associated (or correlated) with Homeritz Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeritz Bhd has no effect on the direction of Hong Leong i.e., Hong Leong and Homeritz Bhd go up and down completely randomly.
Pair Corralation between Hong Leong and Homeritz Bhd
Assuming the 90 days trading horizon Hong Leong is expected to generate 1.94 times less return on investment than Homeritz Bhd. But when comparing it to its historical volatility, Hong Leong Bank is 2.13 times less risky than Homeritz Bhd. It trades about 0.06 of its potential returns per unit of risk. Homeritz Bhd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Homeritz Bhd on August 31, 2024 and sell it today you would earn a total of 13.00 from holding Homeritz Bhd or generate 29.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.64% |
| Values | Daily Returns |
Hong Leong Bank vs. Homeritz Bhd
Performance |
| Timeline |
| Hong Leong Bank |
| Homeritz Bhd |
Hong Leong and Homeritz Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Leong and Homeritz Bhd
The main advantage of trading using opposite Hong Leong and Homeritz Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Leong position performs unexpectedly, Homeritz Bhd 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 Homeritz Bhd will offset losses from the drop in Homeritz Bhd's long position.The idea behind Hong Leong Bank and Homeritz 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.| Homeritz Bhd vs. CB Industrial Product | Homeritz Bhd vs. Diversified Gateway Solutions | Homeritz Bhd vs. Press Metal Bhd | Homeritz Bhd vs. Rubberex M |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |