Correlation Between BA Airport and Heng Leasing

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Can any of the company-specific risk be diversified away by investing in both BA Airport and Heng Leasing 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 BA Airport and Heng Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BA Airport Leasehold and Heng Leasing Capital, you can compare the effects of market volatilities on BA Airport and Heng Leasing 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 BA Airport with a short position of Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of BA Airport and Heng Leasing.

Diversification Opportunities for BA Airport and Heng Leasing

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between BAREIT and Heng is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BA Airport Leasehold and Heng Leasing Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heng Leasing Capital and BA Airport 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 BA Airport Leasehold are associated (or correlated) with Heng Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heng Leasing Capital has no effect on the direction of BA Airport i.e., BA Airport and Heng Leasing go up and down completely randomly.

Pair Corralation between BA Airport and Heng Leasing

Assuming the 90 days trading horizon BA Airport Leasehold is expected to generate 0.38 times more return on investment than Heng Leasing. However, BA Airport Leasehold is 2.64 times less risky than Heng Leasing. It trades about 0.02 of its potential returns per unit of risk. Heng Leasing Capital is currently generating about -0.01 per unit of risk. If you would invest  921.00  in BA Airport Leasehold on December 30, 2024 and sell it today you would earn a total of  9.00  from holding BA Airport Leasehold or generate 0.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

BA Airport Leasehold  vs.  Heng Leasing Capital

 Performance 
       Timeline  
BA Airport Leasehold 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BA Airport Leasehold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BA Airport is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Heng Leasing Capital 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Heng Leasing Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Heng Leasing is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

BA Airport and Heng Leasing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BA Airport and Heng Leasing

The main advantage of trading using opposite BA Airport and Heng Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BA Airport position performs unexpectedly, Heng Leasing 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 Heng Leasing will offset losses from the drop in Heng Leasing's long position.
The idea behind BA Airport Leasehold and Heng Leasing Capital 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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