Correlation Between Tradetool Auto and Hung Sheng

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

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

Diversification Opportunities for Tradetool Auto and Hung Sheng

0.06

Correlation Coefficient

Tradetool Auto  Hung Sheng

Significant diversification

The 3 months correlation between Tradetool and Hung is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tradetool Auto Co and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction and Tradetool Auto 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 Tradetool Auto Co are associated (or correlated) with Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Tradetool Auto i.e., Tradetool Auto and Hung Sheng go up and down completely randomly.

Pair Corralation between Tradetool Auto and Hung Sheng

Assuming the 90 days trading horizon Tradetool Auto Co is expected to under-perform the Hung Sheng. In addition to that, Tradetool Auto is 2.78 times more volatile than Hung Sheng Construction. It trades about -0.21 of its total potential returns per unit of risk. Hung Sheng Construction is currently generating about -0.3 per unit of volatility. If you would invest  2,770  in Hung Sheng Construction on October 11, 2024 and sell it today you would lose (160.00) from holding Hung Sheng Construction or give up 5.78% of portfolio value over 90 days.

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

Tradetool Auto Co  vs.  Hung Sheng Construction

Tradetool Auto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tradetool Auto Co 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Hung Sheng Construction

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hung Sheng Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Tradetool Auto and Hung Sheng

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

The idea behind Tradetool Auto Co and Hung Sheng Construction 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.