Correlation Between Henderson Land and Hang Lung
Can any of the company-specific risk be diversified away by investing in both Henderson Land and Hang Lung 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 Henderson Land and Hang Lung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson Land Development and Hang Lung Properties, you can compare the effects of market volatilities on Henderson Land and Hang Lung 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 Henderson Land with a short position of Hang Lung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson Land and Hang Lung.
Diversification Opportunities for Henderson Land and Hang Lung
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Henderson and Hang is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Land Development and Hang Lung Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Properties and Henderson Land 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 Henderson Land Development are associated (or correlated) with Hang Lung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Lung Properties has no effect on the direction of Henderson Land i.e., Henderson Land and Hang Lung go up and down completely randomly.
Pair Corralation between Henderson Land and Hang Lung
Assuming the 90 days horizon Henderson Land Development is expected to generate 0.65 times more return on investment than Hang Lung. However, Henderson Land Development is 1.54 times less risky than Hang Lung. It trades about -0.08 of its potential returns per unit of risk. Hang Lung Properties is currently generating about -0.09 per unit of risk. If you would invest 324.00 in Henderson Land Development on August 25, 2024 and sell it today you would lose (9.00) from holding Henderson Land Development or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henderson Land Development vs. Hang Lung Properties
Performance |
| Timeline |
| Henderson Land Devel |
| Hang Lung Properties |
Henderson Land and Hang Lung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson Land and Hang Lung
The main advantage of trading using opposite Henderson Land and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Land position performs unexpectedly, Hang Lung 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 Lung will offset losses from the drop in Hang Lung's long position.| Henderson Land vs. Hang Lung Properties | Henderson Land vs. Sun Hung Kai | Henderson Land vs. Hong Kong and | Henderson Land vs. New World Development |
| Hang Lung vs. Ascendas India Trust | Hang Lung vs. Asia Pptys | Hang Lung vs. Adler Group SA | Hang Lung vs. Aztec Land Comb |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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