Correlation Between Heng Leasing and Ally Leasehold

Can any of the company-specific risk be diversified away by investing in both Heng Leasing and Ally Leasehold 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 Heng Leasing and Ally Leasehold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heng Leasing Capital and Ally Leasehold Real, you can compare the effects of market volatilities on Heng Leasing and Ally Leasehold 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 Heng Leasing with a short position of Ally Leasehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heng Leasing and Ally Leasehold.

Diversification Opportunities for Heng Leasing and Ally Leasehold

0.09

Correlation Coefficient

Heng Leasing  Ally Leasehold

Significant diversification

The 3 months correlation between Heng and Ally is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Ally Leasehold Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Leasehold Real and Heng Leasing 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 Heng Leasing Capital are associated (or correlated) with Ally Leasehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Leasehold Real has no effect on the direction of Heng Leasing i.e., Heng Leasing and Ally Leasehold go up and down completely randomly.

Pair Corralation between Heng Leasing and Ally Leasehold

Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the Ally Leasehold. In addition to that, Heng Leasing is 2.51 times more volatile than Ally Leasehold Real. It trades about -0.02 of its total potential returns per unit of risk. Ally Leasehold Real is currently generating about 0.21 per unit of volatility. If you would invest  431.00  in Ally Leasehold Real on September 3, 2024 and sell it today you would earn a total of  94.00  from holding Ally Leasehold Real or generate 21.81% return on investment over 90 days.

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

Heng Leasing Capital  vs.  Ally Leasehold Real

Heng Leasing Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Ally Leasehold Real

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Leasehold Real are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Ally Leasehold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heng Leasing and Ally Leasehold

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

The idea behind Heng Leasing Capital and Ally Leasehold Real 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.