Correlation Between Kung Sing and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Kung Sing 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 Kung Sing and Hung Sheng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kung Sing Engineering and Hung Sheng Construction, you can compare the effects of market volatilities on Kung Sing 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 Kung Sing with a short position of Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kung Sing and Hung Sheng.
Diversification Opportunities for Kung Sing and Hung Sheng
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kung and Hung is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kung Sing Engineering 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 Kung Sing 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 Kung Sing Engineering 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 Kung Sing i.e., Kung Sing and Hung Sheng go up and down completely randomly.
Pair Corralation between Kung Sing and Hung Sheng
Assuming the 90 days trading horizon Kung Sing Engineering is expected to generate 1.37 times more return on investment than Hung Sheng. However, Kung Sing is 1.37 times more volatile than Hung Sheng Construction. It trades about 0.21 of its potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.05 per unit of risk. If you would invest 1,060 in Kung Sing Engineering on December 28, 2024 and sell it today you would earn a total of 270.00 from holding Kung Sing Engineering or generate 25.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kung Sing Engineering vs. Hung Sheng Construction
Performance |
Timeline |
Kung Sing Engineering |
Hung Sheng Construction |
Kung Sing and Hung Sheng Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kung Sing and Hung Sheng
The main advantage of trading using opposite Kung Sing and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kung Sing 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.Kung Sing vs. Chien Kuo Construction | Kung Sing vs. Kee Tai Properties | Kung Sing vs. Grand Pacific Petrochemical | Kung Sing vs. BES Engineering Co |
Hung Sheng vs. Microtek International | Hung Sheng vs. Mosel Vitelic | Hung Sheng vs. Clevo Co | Hung Sheng vs. Silicon Integrated Systems |
Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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