Correlation Between CLP Holdings and Hang Lung

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

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

Diversification Opportunities for CLP Holdings and Hang Lung

0.32

Correlation Coefficient

CLP Holdings  Hang Lung

Weak diversification

The 3 months correlation between CLP and Hang is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CLP Holdings 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 CLP Holdings 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 CLP Holdings 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 CLP Holdings i.e., CLP Holdings and Hang Lung go up and down completely randomly.

Pair Corralation between CLP Holdings and Hang Lung

Assuming the 90 days horizon CLP Holdings is expected to generate 9.84 times less return on investment than Hang Lung. But when comparing it to its historical volatility, CLP Holdings is 1.65 times less risky than Hang Lung. It trades about 0.02 of its potential returns per unit of risk. Hang Lung Properties is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  388.00  in Hang Lung Properties on December 19, 2024 and sell it today you would earn a total of  48.00  from holding Hang Lung Properties or generate 12.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CLP Holdings  vs.  Hang Lung Properties

CLP Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CLP Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, CLP Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hang Lung Properties

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Properties are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hang Lung showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLP Holdings and Hang Lung

The main advantage of trading using opposite CLP Holdings and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLP Holdings 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 CLP Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.