Correlation Between Hengyuan Refining and Techfast Holdings

Can any of the company-specific risk be diversified away by investing in both Hengyuan Refining and Techfast Holdings 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 Hengyuan Refining and Techfast Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hengyuan Refining and Techfast Holdings Bhd, you can compare the effects of market volatilities on Hengyuan Refining and Techfast Holdings 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 Hengyuan Refining with a short position of Techfast Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengyuan Refining and Techfast Holdings.

Diversification Opportunities for Hengyuan Refining and Techfast Holdings

0.72

Correlation Coefficient

Hengyuan Refining  Techfast Holdings

Poor diversification

The 3 months correlation between Hengyuan and Techfast is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hengyuan Refining and Techfast Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techfast Holdings Bhd and Hengyuan Refining 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 Hengyuan Refining are associated (or correlated) with Techfast Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techfast Holdings Bhd has no effect on the direction of Hengyuan Refining i.e., Hengyuan Refining and Techfast Holdings go up and down completely randomly.

Pair Corralation between Hengyuan Refining and Techfast Holdings

Assuming the 90 days trading horizon Hengyuan Refining is expected to under-perform the Techfast Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Hengyuan Refining is 2.96 times less risky than Techfast Holdings. The stock trades about -0.19 of its potential returns per unit of risk. The Techfast Holdings Bhd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Techfast Holdings Bhd on December 27, 2024 and sell it today you would lose (0.50) from holding Techfast Holdings Bhd or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Hengyuan Refining  vs.  Techfast Holdings Bhd

Hengyuan Refining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hengyuan Refining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Techfast Holdings Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Techfast Holdings Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Techfast Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hengyuan Refining and Techfast Holdings

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

The idea behind Hengyuan Refining and Techfast Holdings Bhd 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.