Correlation Between Hengyuan Refining and Swift Haulage

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

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

Diversification Opportunities for Hengyuan Refining and Swift Haulage

0.25

Correlation Coefficient

Hengyuan Refining  Swift Haulage

Modest diversification

The 3 months correlation between Hengyuan and Swift is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hengyuan Refining and Swift Haulage Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Haulage 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 Swift Haulage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Haulage Bhd has no effect on the direction of Hengyuan Refining i.e., Hengyuan Refining and Swift Haulage go up and down completely randomly.

Pair Corralation between Hengyuan Refining and Swift Haulage

Assuming the 90 days trading horizon Hengyuan Refining is expected to generate 2.63 times more return on investment than Swift Haulage. However, Hengyuan Refining is 2.63 times more volatile than Swift Haulage Bhd. It trades about -0.02 of its potential returns per unit of risk. Swift Haulage Bhd is currently generating about -0.07 per unit of risk. If you would invest  222.00  in Hengyuan Refining on August 31, 2024 and sell it today you would lose (22.00) from holding Hengyuan Refining or give up 9.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Hengyuan Refining  vs.  Swift Haulage 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.

Swift Haulage Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swift Haulage 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 Swift Haulage

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

The idea behind Hengyuan Refining and Swift Haulage 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.