Correlation Between Henderson Land and Hong Kong
Can any of the company-specific risk be diversified away by investing in both Henderson Land and Hong Kong 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 Hong Kong 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 Hong Kong and, you can compare the effects of market volatilities on Henderson Land and Hong Kong 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 Hong Kong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson Land and Hong Kong.
Diversification Opportunities for Henderson Land and Hong Kong
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Henderson and Hong is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Land Development and Hong Kong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong 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 Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong has no effect on the direction of Henderson Land i.e., Henderson Land and Hong Kong go up and down completely randomly.
Pair Corralation between Henderson Land and Hong Kong
Assuming the 90 days horizon Henderson Land is expected to generate 1.96 times less return on investment than Hong Kong. But when comparing it to its historical volatility, Henderson Land Development is 1.51 times less risky than Hong Kong. It trades about 0.01 of its potential returns per unit of risk. Hong Kong and is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Hong Kong and on August 29, 2024 and sell it today you would lose (6.00) from holding Hong Kong and or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henderson Land Development vs. Hong Kong and
Performance |
| Timeline |
| Henderson Land Devel |
| Hong Kong |
Henderson Land and Hong Kong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson Land and Hong Kong
The main advantage of trading using opposite Henderson Land and Hong Kong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Land position performs unexpectedly, Hong Kong 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 Kong will offset losses from the drop in Hong Kong'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 |
| Hong Kong vs. Henderson Land Development | Hong Kong vs. CLP Holdings | Hong Kong vs. Power Assets Holdings | Hong Kong vs. Hang Lung Properties |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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