Correlation Between Hsing Ta and Capital Futures

Can any of the company-specific risk be diversified away by investing in both Hsing Ta and Capital Futures 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 Hsing Ta and Capital Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hsing Ta Cement and Capital Futures Corp, you can compare the effects of market volatilities on Hsing Ta and Capital Futures 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 Hsing Ta with a short position of Capital Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and Capital Futures.

Diversification Opportunities for Hsing Ta and Capital Futures

-0.3

Correlation Coefficient

Hsing Ta  Capital Futures

Very good diversification

The 3 months correlation between Hsing and Capital is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and Capital Futures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Futures Corp and Hsing Ta 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 Hsing Ta Cement are associated (or correlated) with Capital Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Futures Corp has no effect on the direction of Hsing Ta i.e., Hsing Ta and Capital Futures go up and down completely randomly.

Pair Corralation between Hsing Ta and Capital Futures

Assuming the 90 days trading horizon Hsing Ta is expected to generate 16.14 times less return on investment than Capital Futures. But when comparing it to its historical volatility, Hsing Ta Cement is 1.23 times less risky than Capital Futures. It trades about 0.0 of its potential returns per unit of risk. Capital Futures Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,965  in Capital Futures Corp on September 20, 2024 and sell it today you would earn a total of  795.00  from holding Capital Futures Corp or generate 16.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Hsing Ta Cement  vs.  Capital Futures Corp

Hsing Ta Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hsing Ta Cement has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hsing Ta is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Capital Futures Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Futures Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Capital Futures is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hsing Ta and Capital Futures

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

The idea behind Hsing Ta Cement and Capital Futures Corp 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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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..