Correlation Between Hong Kong and Wharf Holdings
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Wharf Holdings 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 Hong Kong and Wharf Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong Land and Wharf Holdings, you can compare the effects of market volatilities on Hong Kong and Wharf Holdings 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 Hong Kong with a short position of Wharf Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Wharf Holdings.
Diversification Opportunities for Hong Kong and Wharf Holdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hong and Wharf is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong Land and Wharf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Holdings and Hong Kong 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 Hong Kong Land are associated (or correlated) with Wharf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Holdings has no effect on the direction of Hong Kong i.e., Hong Kong and Wharf Holdings go up and down completely randomly.
Pair Corralation between Hong Kong and Wharf Holdings
Assuming the 90 days horizon Hong Kong is expected to generate 1.96 times less return on investment than Wharf Holdings. But when comparing it to its historical volatility, Hong Kong Land is 1.41 times less risky than Wharf Holdings. It trades about 0.01 of its potential returns per unit of risk. Wharf Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 463.00 in Wharf Holdings on November 2, 2024 and sell it today you would earn a total of 26.00 from holding Wharf Holdings or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.95% |
| Values | Daily Returns |
Hong Kong Land vs. Wharf Holdings
Performance |
| Timeline |
| Hong Kong Land |
| Wharf Holdings |
Hong Kong and Wharf Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Wharf Holdings
The main advantage of trading using opposite Hong Kong and Wharf Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Wharf Holdings 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 Wharf Holdings will offset losses from the drop in Wharf Holdings' long position.| Hong Kong vs. Wharf Holdings | Hong Kong vs. Holiday Island Holdings | Hong Kong vs. Sun Hung Kai | Hong Kong vs. Bayport International Holdings |
| Wharf Holdings vs. Sino Land Co | Wharf Holdings vs. Hong Kong Land | Wharf Holdings vs. Holiday Island Holdings | Wharf Holdings vs. Sun Hung Kai |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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