Correlation Between Heng Leasing and Lohakit Metal

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

Diversification Opportunities for Heng Leasing and Lohakit Metal

0.43

Correlation Coefficient

Heng Leasing  Lohakit Metal

Very weak diversification

The 3 months correlation between Heng and Lohakit is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Lohakit Metal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lohakit Metal Public 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 Lohakit Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lohakit Metal Public has no effect on the direction of Heng Leasing i.e., Heng Leasing and Lohakit Metal go up and down completely randomly.

Pair Corralation between Heng Leasing and Lohakit Metal

Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the Lohakit Metal. In addition to that, Heng Leasing is 4.62 times more volatile than Lohakit Metal Public. It trades about -0.01 of its total potential returns per unit of risk. Lohakit Metal Public is currently generating about 0.08 per unit of volatility. If you would invest  359.00  in Lohakit Metal Public on September 4, 2024 and sell it today you would earn a total of  15.00  from holding Lohakit Metal Public or generate 4.18% 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.  Lohakit Metal Public

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.

Lohakit Metal Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lohakit Metal Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Lohakit Metal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Heng Leasing and Lohakit Metal

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

The idea behind Heng Leasing Capital and Lohakit Metal Public 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.