Correlation Between Hung Sheng and Yungshin Construction

Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Yungshin 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 Yungshin 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 Yungshin Construction Development, you can compare the effects of market volatilities on Hung Sheng and Yungshin 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 Yungshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Yungshin Construction.

Diversification Opportunities for Hung Sheng and Yungshin Construction

-0.62

Correlation Coefficient

Hung Sheng  Yungshin Construction

Excellent diversification

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

Pair Corralation between Hung Sheng and Yungshin Construction

Assuming the 90 days trading horizon Hung Sheng is expected to generate 6.12 times less return on investment than Yungshin Construction. But when comparing it to its historical volatility, Hung Sheng Construction is 1.6 times less risky than Yungshin Construction. It trades about 0.03 of its potential returns per unit of risk. Yungshin Construction Development is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,697  in Yungshin Construction Development on September 19, 2024 and sell it today you would earn a total of  9,153  from holding Yungshin Construction Development or generate 194.87% return on investment over 90 days.

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

Hung Sheng Construction  vs.  Yungshin Construction Developm

Hung Sheng Construction

Risk-Adjusted Performance

0 of 100

Insignificant

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.

Yungshin Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yungshin 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 Yungshin Construction

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

The idea behind Hung Sheng Construction and Yungshin 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.