Correlation Between Hung Sheng and Da Li
Can any of the company-specific risk be diversified away by investing in both Hung Sheng and Da Li 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 Da Li 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 Da Li Development Co, you can compare the effects of market volatilities on Hung Sheng and Da Li 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 Da Li. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Da Li.
Diversification Opportunities for Hung Sheng and Da Li
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hung and 6177 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hung Sheng Construction and Da Li Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Li Development 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 Da Li. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Li Development has no effect on the direction of Hung Sheng i.e., Hung Sheng and Da Li go up and down completely randomly.
Pair Corralation between Hung Sheng and Da Li
Assuming the 90 days trading horizon Hung Sheng is expected to generate 2.36 times less return on investment than Da Li. But when comparing it to its historical volatility, Hung Sheng Construction is 1.53 times less risky than Da Li. It trades about 0.03 of its potential returns per unit of risk. Da Li Development Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,150 in Da Li Development Co on September 25, 2024 and sell it today you would earn a total of 1,185 from holding Da Li Development Co or generate 37.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.76% |
Values | Daily Returns |
Hung Sheng Construction vs. Da Li Development Co
Performance |
Timeline |
Hung Sheng Construction |
Da Li Development |
Hung Sheng and Da Li Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hung Sheng and Da Li
The main advantage of trading using opposite Hung Sheng and Da Li positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hung Sheng position performs unexpectedly, Da Li 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 Da Li will offset losses from the drop in Da Li's long position.Hung Sheng vs. Chainqui Construction Development | Hung Sheng vs. Kee Tai Properties | Hung Sheng vs. BES Engineering Co | Hung Sheng vs. Zinwell |
Da Li vs. Kindom Construction Corp | Da Li vs. Cathay Real Estate | Da Li vs. BES Engineering Co | Da Li vs. Sakura Development Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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