Correlation Between Information Technology and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Information Technology 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 Information Technology and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Technology Total and Hung Sheng Construction, you can compare the effects of market volatilities on Information Technology 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 Information Technology with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Technology and Hung Sheng.
Diversification Opportunities for Information Technology and Hung Sheng
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Information and Hung is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Information Technology Total 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 Information Technology 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 Information Technology Total 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 Information Technology i.e., Information Technology and Hung Sheng go up and down completely randomly.
Pair Corralation between Information Technology and Hung Sheng
Assuming the 90 days trading horizon Information Technology Total is expected to under-perform the Hung Sheng. In addition to that, Information Technology is 1.12 times more volatile than Hung Sheng Construction. It trades about -0.01 of its total potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.07 per unit of volatility. If you would invest 2,035 in Hung Sheng Construction on September 2, 2024 and sell it today you would earn a total of 660.00 from holding Hung Sheng Construction or generate 32.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Technology Total vs. Hung Sheng Construction
Performance |
| Timeline |
| Information Technology |
| Hung Sheng Construction |
Information Technology and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Technology and Hung Sheng
The main advantage of trading using opposite Information Technology and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Technology 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.| Information Technology vs. Chung Hwa Chemical | Information Technology vs. Namchow Chemical Industrial | Information Technology vs. U Media Communications | Information Technology vs. Taita Chemical Co |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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