Correlation Between LAir Liquide and Hang Lung

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

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

Diversification Opportunities for LAir Liquide and Hang Lung

0.0

Correlation Coefficient

LAir Liquide  Hang Lung

Pay attention - limited upside

The 3 months correlation between LAir and Hang is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and Hang Lung Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Group and LAir Liquide 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 LAir Liquide SA 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 Group has no effect on the direction of LAir Liquide i.e., LAir Liquide and Hang Lung go up and down completely randomly.

Pair Corralation between LAir Liquide and Hang Lung

Assuming the 90 days horizon LAir Liquide SA is expected to generate 0.3 times more return on investment than Hang Lung. However, LAir Liquide SA is 3.36 times less risky than Hang Lung. It trades about 0.04 of its potential returns per unit of risk. Hang Lung Group is currently generating about 0.0 per unit of risk. If you would invest  13,408  in LAir Liquide SA on October 27, 2024 and sell it today you would earn a total of  3,790  from holding LAir Liquide SA or generate 28.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	73.08%
Values	Daily Returns

LAir Liquide SA  vs.  Hang Lung Group

LAir Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LAir Liquide is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hang Lung Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hang Lung Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Hang Lung is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LAir Liquide and Hang Lung

The main advantage of trading using opposite LAir Liquide and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide 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 LAir Liquide SA and Hang Lung Group 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.