Correlation Between Hong Leong and Senheng New
Can any of the company-specific risk be diversified away by investing in both Hong Leong and Senheng New 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 Senheng New 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 Senheng New Retail, you can compare the effects of market volatilities on Hong Leong and Senheng New 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 Senheng New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Leong and Senheng New.
Diversification Opportunities for Hong Leong and Senheng New
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hong and Senheng is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hong Leong Bank and Senheng New Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senheng New Retail 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 Senheng New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senheng New Retail has no effect on the direction of Hong Leong i.e., Hong Leong and Senheng New go up and down completely randomly.
Pair Corralation between Hong Leong and Senheng New
Assuming the 90 days trading horizon Hong Leong Bank is expected to generate 0.21 times more return on investment than Senheng New. However, Hong Leong Bank is 4.71 times less risky than Senheng New. It trades about 0.02 of its potential returns per unit of risk. Senheng New Retail is currently generating about -0.1 per unit of risk. If you would invest 2,006 in Hong Leong Bank on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Hong Leong Bank or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hong Leong Bank vs. Senheng New Retail
Performance |
| Timeline |
| Hong Leong Bank |
| Senheng New Retail |
Hong Leong and Senheng New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Leong and Senheng New
The main advantage of trading using opposite Hong Leong and Senheng New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Leong position performs unexpectedly, Senheng New 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 Senheng New will offset losses from the drop in Senheng New's long position.| Hong Leong vs. Malayan Banking Bhd | Hong Leong vs. Public Bank Bhd | Hong Leong vs. RHB Bank Bhd | Hong Leong vs. Resintech Bhd |
| Senheng New vs. DC HEALTHCARE HOLDINGS | Senheng New vs. Choo Bee Metal | Senheng New vs. Awanbiru Technology Bhd | Senheng New vs. Eonmetall Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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