Correlation Between Hang Lung and Aroundtown

Can any of the company-specific risk be diversified away by investing in both Hang Lung and Aroundtown 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 Hang Lung and Aroundtown into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hang Lung Properties and Aroundtown SA, you can compare the effects of market volatilities on Hang Lung and Aroundtown 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 Hang Lung with a short position of Aroundtown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Lung and Aroundtown.

Diversification Opportunities for Hang Lung and Aroundtown

-0.32

Correlation Coefficient

Hang Lung  Aroundtown

Very good diversification

The 3 months correlation between Hang and Aroundtown is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hang Lung Properties and Aroundtown SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aroundtown SA and Hang Lung 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 Hang Lung Properties are associated (or correlated) with Aroundtown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aroundtown SA has no effect on the direction of Hang Lung i.e., Hang Lung and Aroundtown go up and down completely randomly.

Pair Corralation between Hang Lung and Aroundtown

Assuming the 90 days horizon Hang Lung Properties is expected to generate 0.75 times more return on investment than Aroundtown. However, Hang Lung Properties is 1.33 times less risky than Aroundtown. It trades about 0.06 of its potential returns per unit of risk. Aroundtown SA is currently generating about -0.17 per unit of risk. If you would invest  394.00  in Hang Lung Properties on December 30, 2024 and sell it today you would earn a total of  21.00  from holding Hang Lung Properties or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Hang Lung Properties  vs.  Aroundtown SA

Hang Lung Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Hang Lung is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aroundtown SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aroundtown SA 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hang Lung and Aroundtown

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

The idea behind Hang Lung Properties and Aroundtown SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.