Correlation Between Hang Lung and Power Assets

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

Diversification Opportunities for Hang Lung and Power Assets

-0.14

Correlation Coefficient

Hang Lung  Power Assets

Good diversification

The 3 months correlation between Hang and Power is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hang Lung Properties and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Hang Lung i.e., Hang Lung and Power Assets go up and down completely randomly.

Pair Corralation between Hang Lung and Power Assets

Assuming the 90 days horizon Hang Lung Properties is expected to generate 0.65 times more return on investment than Power Assets. However, Hang Lung Properties is 1.53 times less risky than Power Assets. It trades about 0.0 of its potential returns per unit of risk. Power Assets Holdings is currently generating about -0.05 per unit of risk. If you would invest  400.00  in Hang Lung Properties on October 24, 2024 and sell it today you would lose (1.00) from holding Hang Lung Properties or give up 0.25% of portfolio value over 90 days.

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

Hang Lung Properties  vs.  Power Assets Holdings

Hang Lung Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hang Lung Properties has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Power Assets Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Assets Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Power Assets is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hang Lung and Power Assets

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

The idea behind Hang Lung Properties and Power Assets Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.