Correlation Between Power Assets and Hang Seng
Can any of the company-specific risk be diversified away by investing in both Power Assets and Hang Seng 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 Power Assets and Hang Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Assets Holdings and Hang Seng Bank, you can compare the effects of market volatilities on Power Assets and Hang Seng 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 Power Assets with a short position of Hang Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Assets and Hang Seng.
Diversification Opportunities for Power Assets and Hang Seng
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Power and Hang is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Power Assets Holdings and Hang Seng Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Seng Bank and Power Assets 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 Power Assets Holdings are associated (or correlated) with Hang Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Seng Bank has no effect on the direction of Power Assets i.e., Power Assets and Hang Seng go up and down completely randomly.
Pair Corralation between Power Assets and Hang Seng
Assuming the 90 days horizon Power Assets Holdings is expected to generate 1.49 times more return on investment than Hang Seng. However, Power Assets is 1.49 times more volatile than Hang Seng Bank. It trades about 0.04 of its potential returns per unit of risk. Hang Seng Bank is currently generating about -0.01 per unit of risk. If you would invest 467.00 in Power Assets Holdings on November 2, 2024 and sell it today you would earn a total of 178.00 from holding Power Assets Holdings or generate 38.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Assets Holdings vs. Hang Seng Bank
Performance |
| Timeline |
| Power Assets Holdings |
| Hang Seng Bank |
Power Assets and Hang Seng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Assets and Hang Seng
The main advantage of trading using opposite Power Assets and Hang Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Assets position performs unexpectedly, Hang Seng 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 Hang Seng will offset losses from the drop in Hang Seng's long position.| Power Assets vs. TransAlta Corp | Power Assets vs. Pampa Energia SA | Power Assets vs. Vistra Energy Corp | Power Assets vs. NRG Energy |
| Hang Seng vs. Caixabank SA ADR | Hang Seng vs. Commercial International Bank | Hang Seng vs. PT Bank Rakyat | Hang Seng vs. Riverview Bancorp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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