Correlation Between Grand Fortune and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Grand Fortune 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 Grand Fortune and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Fortune Securities and Hung Sheng Construction, you can compare the effects of market volatilities on Grand Fortune 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 Grand Fortune with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Fortune and Hung Sheng.
Diversification Opportunities for Grand Fortune and Hung Sheng
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grand and Hung is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Grand Fortune 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 Grand Fortune 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 Grand Fortune 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 Grand Fortune i.e., Grand Fortune and Hung Sheng go up and down completely randomly.
Pair Corralation between Grand Fortune and Hung Sheng
Assuming the 90 days trading horizon Grand Fortune Securities is expected to generate 0.45 times more return on investment than Hung Sheng. However, Grand Fortune Securities is 2.21 times less risky than Hung Sheng. It trades about -0.1 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about -0.05 per unit of risk. If you would invest 1,340 in Grand Fortune Securities on November 2, 2024 and sell it today you would lose (100.00) from holding Grand Fortune Securities or give up 7.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Fortune Securities vs. Hung Sheng Construction
Performance |
| Timeline |
| Grand Fortune Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hung Sheng Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Grand Fortune and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Fortune and Hung Sheng
The main advantage of trading using opposite Grand Fortune and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Fortune 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.The idea behind Grand Fortune Securities and Hung Sheng Construction 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.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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