Correlation Between Good Finance and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Good Finance 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 Good Finance and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Good Finance Securities and Hung Sheng Construction, you can compare the effects of market volatilities on Good Finance 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 Good Finance with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Finance and Hung Sheng.
Diversification Opportunities for Good Finance and Hung Sheng
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Good and Hung is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Good Finance Securities 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 Good Finance 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 Good Finance Securities 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 Good Finance i.e., Good Finance and Hung Sheng go up and down completely randomly.
Pair Corralation between Good Finance and Hung Sheng
Assuming the 90 days trading horizon Good Finance Securities is expected to generate 1.31 times more return on investment than Hung Sheng. However, Good Finance is 1.31 times more volatile than Hung Sheng Construction. It trades about 0.04 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.02 per unit of risk. If you would invest 1,835 in Good Finance Securities on October 10, 2024 and sell it today you would earn a total of 540.00 from holding Good Finance Securities or generate 29.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Good Finance Securities vs. Hung Sheng Construction
Performance |
| Timeline |
| Good Finance Securities |
| Hung Sheng Construction |
Good Finance and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Good Finance and Hung Sheng
The main advantage of trading using opposite Good Finance and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Finance 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.| Good Finance vs. Shanghai Commercial Savings | Good Finance vs. Kuo Yang Construction | Good Finance vs. New Asia Construction | Good Finance vs. International CSRC Investment |
| Hung Sheng vs. Chainqui Construction Development | Hung Sheng vs. Kee Tai Properties | Hung Sheng vs. BES Engineering Co | Hung Sheng vs. Zinwell |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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