Correlation Between Leatec Fine and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Leatec Fine 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 Leatec Fine and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leatec Fine Ceramics and Hung Sheng Construction, you can compare the effects of market volatilities on Leatec Fine 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 Leatec Fine with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leatec Fine and Hung Sheng.
Diversification Opportunities for Leatec Fine and Hung Sheng
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leatec and Hung is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics 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 Leatec Fine 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 Leatec Fine Ceramics 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 Leatec Fine i.e., Leatec Fine and Hung Sheng go up and down completely randomly.
Pair Corralation between Leatec Fine and Hung Sheng
Assuming the 90 days trading horizon Leatec Fine is expected to generate 1.11 times less return on investment than Hung Sheng. In addition to that, Leatec Fine is 1.28 times more volatile than Hung Sheng Construction. It trades about 0.05 of its total potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.06 per unit of volatility. If you would invest 2,615 in Hung Sheng Construction on August 31, 2024 and sell it today you would earn a total of 55.00 from holding Hung Sheng Construction or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Leatec Fine Ceramics vs. Hung Sheng Construction
Performance |
| Timeline |
| Leatec Fine Ceramics |
| Hung Sheng Construction |
Leatec Fine and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leatec Fine and Hung Sheng
The main advantage of trading using opposite Leatec Fine and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leatec Fine 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.| Leatec Fine vs. Hung Sheng Construction | Leatec Fine vs. Silicon Power Computer | Leatec Fine vs. Qualipoly Chemical Corp | Leatec Fine vs. Chi Sheng Chemical |
| Hung Sheng vs. Huaku Development Co | Hung Sheng vs. Ruentex Development Co | Hung Sheng vs. CTCI Corp | Hung Sheng vs. Information Technology Total |
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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