Correlation Between Heng Leasing and Information

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

Diversification Opportunities for Heng Leasing and Information

0.3

Correlation Coefficient

Heng Leasing  Information

Weak diversification

The 3 months correlation between Heng and Information is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Information and Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information and Comm 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 Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information and Comm has no effect on the direction of Heng Leasing i.e., Heng Leasing and Information go up and down completely randomly.

Pair Corralation between Heng Leasing and Information

Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the Information. In addition to that, Heng Leasing is 1.64 times more volatile than Information and Communication. It trades about -0.02 of its total potential returns per unit of risk. Information and Communication is currently generating about 0.06 per unit of volatility. If you would invest  206.00  in Information and Communication on September 3, 2024 and sell it today you would earn a total of  14.00  from holding Information and Communication or generate 6.8% return on investment over 90 days.

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

Heng Leasing Capital  vs.  Information and Communication

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.

Information and Comm

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Information and Communication are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Heng Leasing and Information

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

The idea behind Heng Leasing Capital and Information and Communication 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.