Correlation Between Hong Kong and Henderson Land
Can any of the company-specific risk be diversified away by investing in both Hong Kong and Henderson Land 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 Henderson Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Kong and and Henderson Land Development, you can compare the effects of market volatilities on Hong Kong and Henderson Land 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 Henderson Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Henderson Land.
Diversification Opportunities for Hong Kong and Henderson Land
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hong and Henderson is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong and and Henderson Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Land Devel 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 and are associated (or correlated) with Henderson Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Land Devel has no effect on the direction of Hong Kong i.e., Hong Kong and Henderson Land go up and down completely randomly.
Pair Corralation between Hong Kong and Henderson Land
Assuming the 90 days horizon Hong Kong and is expected to generate 3.0 times more return on investment than Henderson Land. However, Hong Kong is 3.0 times more volatile than Henderson Land Development. It trades about -0.01 of its potential returns per unit of risk. Henderson Land Development is currently generating about -0.08 per unit of risk. If you would invest 71.00 in Hong Kong and on August 25, 2024 and sell it today you would lose (2.00) from holding Hong Kong and or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Kong and vs. Henderson Land Development
Performance |
| Timeline |
| Hong Kong |
| Henderson Land Devel |
Hong Kong and Henderson Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Henderson Land
The main advantage of trading using opposite Hong Kong and Henderson Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong position performs unexpectedly, Henderson Land 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 Henderson Land will offset losses from the drop in Henderson Land's long position.| Hong Kong vs. Henderson Land Development | Hong Kong vs. CLP Holdings | Hong Kong vs. Power Assets Holdings | Hong Kong vs. Hang Lung Properties |
| Henderson Land vs. Sun Hung Kai | Henderson Land vs. Hang Lung Properties | Henderson Land vs. Swire Pacific | Henderson Land vs. Sino Land Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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