Correlation Between Heng Leasing and Steel Public

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

Diversification Opportunities for Heng Leasing and Steel Public

-0.05

Correlation Coefficient

Heng Leasing  Steel Public

Good diversification

The 3 months correlation between Heng and Steel is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and The Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel 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 Steel Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Public has no effect on the direction of Heng Leasing i.e., Heng Leasing and Steel Public go up and down completely randomly.

Pair Corralation between Heng Leasing and Steel Public

Assuming the 90 days trading horizon Heng Leasing Capital is expected to generate 0.67 times more return on investment than Steel Public. However, Heng Leasing Capital is 1.49 times less risky than Steel Public. It trades about -0.01 of its potential returns per unit of risk. The Steel Public is currently generating about -0.06 per unit of risk. If you would invest  107.00  in Heng Leasing Capital on December 29, 2024 and sell it today you would lose (3.00) from holding Heng Leasing Capital or give up 2.8% of portfolio value over 90 days.

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

Heng Leasing Capital  vs.  The Steel Public

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 quite persistent forward-looking signals, Heng Leasing is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Steel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Heng Leasing and Steel Public

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

The idea behind Heng Leasing Capital and The Steel 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.