Correlation Between Huang Hsiang and Lucky Cement

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Can any of the company-specific risk be diversified away by investing in both Huang Hsiang and Lucky Cement 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 Huang Hsiang and Lucky Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huang Hsiang Construction and Lucky Cement Co, you can compare the effects of market volatilities on Huang Hsiang and Lucky Cement 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 Huang Hsiang with a short position of Lucky Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huang Hsiang and Lucky Cement.

Diversification Opportunities for Huang Hsiang and Lucky Cement

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Huang and Lucky is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Huang Hsiang Construction and Lucky Cement Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucky Cement and Huang Hsiang 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 Huang Hsiang Construction are associated (or correlated) with Lucky Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucky Cement has no effect on the direction of Huang Hsiang i.e., Huang Hsiang and Lucky Cement go up and down completely randomly.

Pair Corralation between Huang Hsiang and Lucky Cement

Assuming the 90 days trading horizon Huang Hsiang Construction is expected to under-perform the Lucky Cement. In addition to that, Huang Hsiang is 7.41 times more volatile than Lucky Cement Co. It trades about -0.27 of its total potential returns per unit of risk. Lucky Cement Co is currently generating about -0.04 per unit of volatility. If you would invest  1,450  in Lucky Cement Co on September 28, 2024 and sell it today you would lose (5.00) from holding Lucky Cement Co or give up 0.34% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Huang Hsiang Construction  vs.  Lucky Cement Co

 Performance 
       Timeline  
Huang Hsiang Construction 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Huang Hsiang Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Huang Hsiang may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Lucky Cement 

Risk-Adjusted Performance

0 of 100

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

Huang Hsiang and Lucky Cement Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huang Hsiang and Lucky Cement

The main advantage of trading using opposite Huang Hsiang and Lucky Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huang Hsiang position performs unexpectedly, Lucky Cement 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 Lucky Cement will offset losses from the drop in Lucky Cement's long position.
The idea behind Huang Hsiang Construction and Lucky Cement Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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