Correlation Between Hung Sheng and JSL Construction

Can any of the company-specific risk be diversified away by investing in both Hung Sheng and JSL Construction 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 Hung Sheng and JSL Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hung Sheng Construction and JSL Construction Development, you can compare the effects of market volatilities on Hung Sheng and JSL Construction 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 Hung Sheng with a short position of JSL Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and JSL Construction.

Diversification Opportunities for Hung Sheng and JSL Construction

-0.51

Correlation Coefficient

Hung Sheng  JSL Construction

Excellent diversification

The 3 months correlation between Hung and JSL is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and JSL Construction Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSL Construction Dev and Hung Sheng 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 Hung Sheng Construction are associated (or correlated) with JSL Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSL Construction Dev has no effect on the direction of Hung Sheng i.e., Hung Sheng and JSL Construction go up and down completely randomly.

Pair Corralation between Hung Sheng and JSL Construction

Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.42 times more return on investment than JSL Construction. However, Hung Sheng Construction is 2.37 times less risky than JSL Construction. It trades about 0.0 of its potential returns per unit of risk. JSL Construction Development is currently generating about -0.1 per unit of risk. If you would invest  2,650  in Hung Sheng Construction on September 19, 2024 and sell it today you would lose (50.00) from holding Hung Sheng Construction or give up 1.89% of portfolio value over 90 days.

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

Hung Sheng Construction  vs.  JSL Construction Development

Hung Sheng Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

JSL Construction Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSL Construction Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Hung Sheng and JSL Construction

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

The idea behind Hung Sheng Construction and JSL Construction Development 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.