Correlation Between Aquagold International and Hang Lung

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

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

Diversification Opportunities for Aquagold International and Hang Lung

0.03

Correlation Coefficient

Aquagold International  Hang Lung

Significant diversification

The 3 months correlation between Aquagold and Hang is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International 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 Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and Hang Lung go up and down completely randomly.

Pair Corralation between Aquagold International and Hang Lung

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Hang Lung. In addition to that, Aquagold International is 6.64 times more volatile than Hang Lung Group. It trades about -0.17 of its total potential returns per unit of risk. Hang Lung Group is currently generating about 0.13 per unit of volatility. If you would invest  110.00  in Hang Lung Group on December 20, 2024 and sell it today you would earn a total of  17.00  from holding Hang Lung Group or generate 15.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Aquagold International  vs.  Hang Lung Group

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hang Lung Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Hang Lung reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquagold International and Hang Lung

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

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.