Correlation Between Hengyuan Refining and Insas Bhd

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

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

Diversification Opportunities for Hengyuan Refining and Insas Bhd

0.36

Correlation Coefficient

Hengyuan Refining  Insas Bhd

Weak diversification

The 3 months correlation between Hengyuan and Insas is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hengyuan Refining and Insas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insas 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 Insas Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insas Bhd has no effect on the direction of Hengyuan Refining i.e., Hengyuan Refining and Insas Bhd go up and down completely randomly.

Pair Corralation between Hengyuan Refining and Insas Bhd

Assuming the 90 days trading horizon Hengyuan Refining is expected to generate 3.57 times more return on investment than Insas Bhd. However, Hengyuan Refining is 3.57 times more volatile than Insas Bhd. It trades about -0.01 of its potential returns per unit of risk. Insas Bhd is currently generating about -0.08 per unit of risk. If you would invest  220.00  in Hengyuan Refining on September 3, 2024 and sell it today you would lose (17.00) from holding Hengyuan Refining or give up 7.73% of portfolio value over 90 days.

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

Hengyuan Refining  vs.  Insas Bhd

Hengyuan Refining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Insas Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insas Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Hengyuan Refining and Insas Bhd

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

The idea behind Hengyuan Refining and Insas 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.