Correlation Between Heng Leasing and Premier Marketing

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

Diversification Opportunities for Heng Leasing and Premier Marketing

-0.58

Correlation Coefficient

Heng Leasing  Premier Marketing

Excellent diversification

The 3 months correlation between Heng and Premier is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Premier Marketing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Marketing 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 Premier Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Marketing Public has no effect on the direction of Heng Leasing i.e., Heng Leasing and Premier Marketing go up and down completely randomly.

Pair Corralation between Heng Leasing and Premier Marketing

Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the Premier Marketing. In addition to that, Heng Leasing is 2.11 times more volatile than Premier Marketing Public. It trades about -0.01 of its total potential returns per unit of risk. Premier Marketing Public is currently generating about 0.11 per unit of volatility. If you would invest  815.00  in Premier Marketing Public on September 4, 2024 and sell it today you would earn a total of  100.00  from holding Premier Marketing Public or generate 12.27% return on investment over 90 days.

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

Heng Leasing Capital  vs.  Premier Marketing 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.

Premier Marketing Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Marketing Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Premier Marketing disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heng Leasing and Premier Marketing

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

The idea behind Heng Leasing Capital and Premier Marketing 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.