Correlation Between Advanced Packaging and Hong Leong
Can any of the company-specific risk be diversified away by investing in both Advanced Packaging and Hong Leong 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 Advanced Packaging and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Packaging Tech and Hong Leong Bank, you can compare the effects of market volatilities on Advanced Packaging and Hong Leong 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 Advanced Packaging with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Packaging and Hong Leong.
Diversification Opportunities for Advanced Packaging and Hong Leong
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Hong is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Packaging Tech and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank and Advanced Packaging 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 Advanced Packaging Tech are associated (or correlated) with Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of Advanced Packaging i.e., Advanced Packaging and Hong Leong go up and down completely randomly.
Pair Corralation between Advanced Packaging and Hong Leong
Assuming the 90 days trading horizon Advanced Packaging Tech is expected to under-perform the Hong Leong. In addition to that, Advanced Packaging is 1.65 times more volatile than Hong Leong Bank. It trades about 0.0 of its total potential returns per unit of risk. Hong Leong Bank is currently generating about 0.08 per unit of volatility. If you would invest 1,894 in Hong Leong Bank on September 3, 2024 and sell it today you would earn a total of 174.00 from holding Hong Leong Bank or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.31% |
| Values | Daily Returns |
Advanced Packaging Tech vs. Hong Leong Bank
Performance |
| Timeline |
| Advanced Packaging Tech |
| Hong Leong Bank |
Advanced Packaging and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Packaging and Hong Leong
The main advantage of trading using opposite Advanced Packaging and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Packaging position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong's long position.The idea behind Advanced Packaging Tech and Hong Leong Bank 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.| Hong Leong vs. SFP Tech Holdings | Hong Leong vs. Malayan Banking Bhd | Hong Leong vs. Aurelius Technologies Bhd | Hong Leong vs. Alliance Financial Group |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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