Correlation Between Hang Lung and City Developments
Can any of the company-specific risk be diversified away by investing in both Hang Lung and City Developments 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 Hang Lung and City Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hang Lung Properties and City Developments, you can compare the effects of market volatilities on Hang Lung and City Developments 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 Hang Lung with a short position of City Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Lung and City Developments.
Diversification Opportunities for Hang Lung and City Developments
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hang and City is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hang Lung Properties and City Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Developments and Hang Lung 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 Hang Lung Properties are associated (or correlated) with City Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Developments has no effect on the direction of Hang Lung i.e., Hang Lung and City Developments go up and down completely randomly.
Pair Corralation between Hang Lung and City Developments
Assuming the 90 days horizon Hang Lung Properties is expected to generate 0.91 times more return on investment than City Developments. However, Hang Lung Properties is 1.1 times less risky than City Developments. It trades about 0.02 of its potential returns per unit of risk. City Developments is currently generating about -0.01 per unit of risk. If you would invest 416.00 in Hang Lung Properties on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Hang Lung Properties or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hang Lung Properties vs. City Developments
Performance |
| Timeline |
| Hang Lung Properties |
| City Developments |
Hang Lung and City Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hang Lung and City Developments
The main advantage of trading using opposite Hang Lung and City Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hang Lung position performs unexpectedly, City Developments 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 City Developments will offset losses from the drop in City Developments' long position.| Hang Lung vs. Ascendas India Trust | Hang Lung vs. Asia Pptys | Hang Lung vs. Adler Group SA | Hang Lung vs. Aztec Land Comb |
| City Developments vs. HUMANA INC | City Developments vs. SCOR PK | City Developments vs. Aquagold International | City Developments vs. Thrivent High Yield |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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