Correlation Between Heng Leasing and BA Airport

Can any of the company-specific risk be diversified away by investing in both Heng Leasing and BA Airport 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 BA Airport 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 BA Airport Leasehold, you can compare the effects of market volatilities on Heng Leasing and BA Airport 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 BA Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heng Leasing and BA Airport.

Diversification Opportunities for Heng Leasing and BA Airport

0.69

Correlation Coefficient

Heng Leasing  BA Airport

Poor diversification

The 3 months correlation between Heng and BAREIT is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and BA Airport Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BA Airport Leasehold 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 BA Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BA Airport Leasehold has no effect on the direction of Heng Leasing i.e., Heng Leasing and BA Airport go up and down completely randomly.

Pair Corralation between Heng Leasing and BA Airport

Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the BA Airport. In addition to that, Heng Leasing is 3.22 times more volatile than BA Airport Leasehold. It trades about -0.04 of its total potential returns per unit of risk. BA Airport Leasehold is currently generating about 0.05 per unit of volatility. If you would invest  940.00  in BA Airport Leasehold on December 2, 2024 and sell it today you would earn a total of  20.00  from holding BA Airport Leasehold or generate 2.13% return on investment over 90 days.

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

Heng Leasing Capital  vs.  BA Airport Leasehold

Heng Leasing Capital

Risk-Adjusted Performance

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

BA Airport Leasehold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BA Airport Leasehold are ranked lower than 3 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Heng Leasing and BA Airport

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

The idea behind Heng Leasing Capital and BA Airport Leasehold 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..