Correlation Between Ascendas India and Hang Lung

Can any of the company-specific risk be diversified away by investing in both Ascendas India and Hang Lung 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 Ascendas India and Hang Lung into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ascendas India Trust and Hang Lung Properties, you can compare the effects of market volatilities on Ascendas India and Hang Lung 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 Ascendas India with a short position of Hang Lung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascendas India and Hang Lung.

Diversification Opportunities for Ascendas India and Hang Lung

-0.63

Correlation Coefficient

Ascendas India  Hang Lung

Excellent diversification

The 3 months correlation between Ascendas and Hang is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ascendas India Trust and Hang Lung Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Properties and Ascendas India 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 Ascendas India Trust are associated (or correlated) with Hang Lung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Lung Properties has no effect on the direction of Ascendas India i.e., Ascendas India and Hang Lung go up and down completely randomly.

Pair Corralation between Ascendas India and Hang Lung

Assuming the 90 days horizon Ascendas India Trust is expected to under-perform the Hang Lung. In addition to that, Ascendas India is 1.97 times more volatile than Hang Lung Properties. It trades about -0.05 of its total potential returns per unit of risk. Hang Lung Properties is currently generating about 0.06 per unit of volatility. If you would invest  394.00  in Hang Lung Properties on December 29, 2024 and sell it today you would earn a total of  21.00  from holding Hang Lung Properties or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

Ascendas India Trust  vs.  Hang Lung Properties

Ascendas India Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ascendas India Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hang Lung Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Hang Lung is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ascendas India and Hang Lung

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

The idea behind Ascendas India Trust and Hang Lung Properties 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.