Correlation Between JF Technology and Ho Hup

Can any of the company-specific risk be diversified away by investing in both JF Technology and Ho Hup 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 JF Technology and Ho Hup into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JF Technology BHD and Ho Hup Construction, you can compare the effects of market volatilities on JF Technology and Ho Hup 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 JF Technology with a short position of Ho Hup. Check out your portfolio center. Please also check ongoing floating volatility patterns of JF Technology and Ho Hup.

Diversification Opportunities for JF Technology and Ho Hup

-0.62

Correlation Coefficient

JF Technology  Ho Hup

Excellent diversification

The 3 months correlation between 0146 and 5169 is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding JF Technology BHD and Ho Hup Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Hup Construction and JF Technology 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 JF Technology BHD are associated (or correlated) with Ho Hup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Hup Construction has no effect on the direction of JF Technology i.e., JF Technology and Ho Hup go up and down completely randomly.

Pair Corralation between JF Technology and Ho Hup

Assuming the 90 days trading horizon JF Technology BHD is expected to under-perform the Ho Hup. But the stock apears to be less risky and, when comparing its historical volatility, JF Technology BHD is 2.2 times less risky than Ho Hup. The stock trades about -0.27 of its potential returns per unit of risk. The Ho Hup Construction is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Ho Hup Construction on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Ho Hup Construction or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

JF Technology BHD  vs.  Ho Hup Construction

JF Technology BHD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JF Technology BHD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ho Hup Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ho Hup Construction are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Ho Hup disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JF Technology and Ho Hup

The main advantage of trading using opposite JF Technology and Ho Hup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JF Technology position performs unexpectedly, Ho Hup 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 Ho Hup will offset losses from the drop in Ho Hup's long position.

The idea behind JF Technology BHD and Ho Hup Construction 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.