Correlation Between Yungshin Construction and Hung Sheng

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

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

Diversification Opportunities for Yungshin Construction and Hung Sheng

-0.62

Correlation Coefficient

Yungshin Construction  Hung Sheng

Excellent diversification

The 3 months correlation between Yungshin and Hung is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Yungshin Construction Developm 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 Yungshin Construction 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 Yungshin Construction Development 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 Yungshin Construction i.e., Yungshin Construction and Hung Sheng go up and down completely randomly.

Pair Corralation between Yungshin Construction and Hung Sheng

Assuming the 90 days trading horizon Yungshin Construction Development is expected to generate 1.6 times more return on investment than Hung Sheng. However, Yungshin Construction is 1.6 times more volatile than Hung Sheng Construction. It trades about 0.11 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.03 per unit of risk. If you would invest  4,697  in Yungshin Construction Development on September 19, 2024 and sell it today you would earn a total of  9,153  from holding Yungshin Construction Development or generate 194.87% return on investment over 90 days.

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

Yungshin Construction Developm  vs.  Hung Sheng Construction

Yungshin Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yungshin Construction Development 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 January 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

0 of 100

Insignificant

Over the last 90 days Hung Sheng Construction has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Yungshin Construction and Hung Sheng

The main advantage of trading using opposite Yungshin Construction and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yungshin Construction 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 Yungshin Construction Development 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.