Correlation Between Hong Kong and Hang Lung
Can any of the company-specific risk be diversified away by investing in both Hong Kong 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 Hong Kong and Hang Lung 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 Hang Lung Properties, you can compare the effects of market volatilities on Hong Kong 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 Hong Kong with a short position of Hang Lung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Kong and Hang Lung.
Diversification Opportunities for Hong Kong and Hang Lung
Weak diversification
The 3 months correlation between Hong and Hang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hong Kong and 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 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 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 Hong Kong i.e., Hong Kong and Hang Lung go up and down completely randomly.
Pair Corralation between Hong Kong and Hang Lung
Assuming the 90 days horizon Hong Kong and is expected to generate 2.03 times more return on investment than Hang Lung. However, Hong Kong is 2.03 times more volatile than Hang Lung Properties. It trades about -0.01 of its potential returns per unit of risk. Hang Lung Properties is currently generating about -0.18 per unit of risk. If you would invest 74.00 in Hong Kong and on August 28, 2024 and sell it today you would lose (2.00) from holding Hong Kong and or give up 2.7% 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. Hang Lung Properties
Performance |
| Timeline |
| Hong Kong |
| Hang Lung Properties |
Hong Kong and Hang Lung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Kong and Hang Lung
The main advantage of trading using opposite Hong Kong and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Kong 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.| Hong Kong vs. Henderson Land Development | Hong Kong vs. CLP Holdings | Hong Kong vs. Power Assets Holdings | Hong Kong vs. Hang Lung Properties |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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