Correlation Between Heng Leasing and Pacific Pipe
Can any of the company-specific risk be diversified away by investing in both Heng Leasing and Pacific Pipe 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 Heng Leasing and Pacific Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heng Leasing Capital and Pacific Pipe Public, you can compare the effects of market volatilities on Heng Leasing and Pacific Pipe 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 Heng Leasing with a short position of Pacific Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heng Leasing and Pacific Pipe.
Diversification Opportunities for Heng Leasing and Pacific Pipe
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Heng and Pacific is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Pacific Pipe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Pipe Public and Heng Leasing 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 Heng Leasing Capital are associated (or correlated) with Pacific Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Pipe Public has no effect on the direction of Heng Leasing i.e., Heng Leasing and Pacific Pipe go up and down completely randomly.
Pair Corralation between Heng Leasing and Pacific Pipe
Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the Pacific Pipe. In addition to that, Heng Leasing is 1.02 times more volatile than Pacific Pipe Public. It trades about -0.05 of its total potential returns per unit of risk. Pacific Pipe Public is currently generating about -0.03 per unit of volatility. If you would invest 230.00 in Pacific Pipe Public on September 1, 2024 and sell it today you would lose (54.00) from holding Pacific Pipe Public or give up 23.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heng Leasing Capital vs. Pacific Pipe Public
Performance |
| Timeline |
| Heng Leasing Capital |
| Pacific Pipe Public |
Heng Leasing and Pacific Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heng Leasing and Pacific Pipe
The main advantage of trading using opposite Heng Leasing and Pacific Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heng Leasing position performs unexpectedly, Pacific Pipe 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 Pacific Pipe will offset losses from the drop in Pacific Pipe's long position.| Heng Leasing vs. Bangkok Commercial Asset | Heng Leasing vs. Siam Global House | Heng Leasing vs. Dohome Public | Heng Leasing vs. JMT Network Services |
| Pacific Pipe vs. TMT Steel Public | Pacific Pipe vs. MCS Steel Public | Pacific Pipe vs. KGI Securities Public | Pacific Pipe vs. Permsin Steel Works |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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