Correlation Between Interlink Communication and Heng Leasing
Can any of the company-specific risk be diversified away by investing in both Interlink Communication and Heng Leasing 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 Interlink Communication and Heng Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interlink Communication Public and Heng Leasing Capital, you can compare the effects of market volatilities on Interlink Communication and Heng Leasing 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 Interlink Communication with a short position of Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interlink Communication and Heng Leasing.
Diversification Opportunities for Interlink Communication and Heng Leasing
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Interlink and Heng is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Interlink Communication Public and Heng Leasing Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heng Leasing Capital and Interlink Communication 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 Interlink Communication Public are associated (or correlated) with Heng Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heng Leasing Capital has no effect on the direction of Interlink Communication i.e., Interlink Communication and Heng Leasing go up and down completely randomly.
Pair Corralation between Interlink Communication and Heng Leasing
Assuming the 90 days trading horizon Interlink Communication Public is expected to under-perform the Heng Leasing. But the stock apears to be less risky and, when comparing its historical volatility, Interlink Communication Public is 1.8 times less risky than Heng Leasing. The stock trades about -0.04 of its potential returns per unit of risk. The Heng Leasing Capital is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 136.00 in Heng Leasing Capital on September 1, 2024 and sell it today you would lose (18.00) from holding Heng Leasing Capital or give up 13.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interlink Communication Public vs. Heng Leasing Capital
Performance |
| Timeline |
| Interlink Communication |
| Heng Leasing Capital |
Interlink Communication and Heng Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interlink Communication and Heng Leasing
The main advantage of trading using opposite Interlink Communication and Heng Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interlink Communication position performs unexpectedly, Heng Leasing 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 Heng Leasing will offset losses from the drop in Heng Leasing's long position.The idea behind Interlink Communication Public and Heng Leasing Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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