Correlation Between Steel Public and Heng Leasing
Can any of the company-specific risk be diversified away by investing in both Steel Public 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 Steel Public and Heng Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Steel Public and Heng Leasing Capital, you can compare the effects of market volatilities on Steel Public 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 Steel Public with a short position of Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Public and Heng Leasing.
Diversification Opportunities for Steel Public and Heng Leasing
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Steel and Heng is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Steel 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 Steel Public 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 The Steel 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 Steel Public i.e., Steel Public and Heng Leasing go up and down completely randomly.
Pair Corralation between Steel Public and Heng Leasing
Assuming the 90 days trading horizon The Steel Public is expected to generate 17.42 times more return on investment than Heng Leasing. However, Steel Public is 17.42 times more volatile than Heng Leasing Capital. It trades about 0.04 of its potential returns per unit of risk. Heng Leasing Capital is currently generating about -0.06 per unit of risk. If you would invest 144.00 in The Steel Public on August 29, 2024 and sell it today you would lose (66.00) from holding The Steel Public or give up 45.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Steel Public vs. Heng Leasing Capital
Performance |
| Timeline |
| Steel Public |
| Heng Leasing Capital |
Steel Public and Heng Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Public and Heng Leasing
The main advantage of trading using opposite Steel Public and Heng Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Public 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.| Steel Public vs. MCS Steel Public | Steel Public vs. Asia Plus Group | Steel Public vs. Lalin Property Public | Steel Public vs. Lam Soon Public |
| Heng Leasing vs. Amanah Leasing Public | Heng Leasing vs. Infraset Public | Heng Leasing vs. JMT Network Services |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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