Correlation Between Heng Leasing and Country Group

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

Diversification Opportunities for Heng Leasing and Country Group

0.51

Correlation Coefficient

Heng Leasing  Country Group

Very weak diversification

The 3 months correlation between Heng and Country is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Country Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Group Holdings 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 Country Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Group Holdings has no effect on the direction of Heng Leasing i.e., Heng Leasing and Country Group go up and down completely randomly.

Pair Corralation between Heng Leasing and Country Group

Assuming the 90 days trading horizon Heng Leasing Capital is expected to generate 0.96 times more return on investment than Country Group. However, Heng Leasing Capital is 1.04 times less risky than Country Group. It trades about 0.04 of its potential returns per unit of risk. Country Group Holdings is currently generating about -0.19 per unit of risk. If you would invest  114.00  in Heng Leasing Capital on November 28, 2024 and sell it today you would earn a total of  4.00  from holding Heng Leasing Capital or generate 3.51% return on investment over 90 days.

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

Heng Leasing Capital  vs.  Country Group Holdings

Heng Leasing Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heng Leasing Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Country Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Country Group Holdings 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 technical indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Heng Leasing and Country Group

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

The idea behind Heng Leasing Capital and Country Group Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.