Correlation Between Hang Lung and Hong Kong

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

Diversification Opportunities for Hang Lung and Hong Kong

-0.62

Correlation Coefficient

Hang Lung  Hong Kong

Excellent diversification

The 3 months correlation between Hang and Hong is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hang Lung Properties and Hong Kong And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Kong And 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 Hong Kong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Kong And has no effect on the direction of Hang Lung i.e., Hang Lung and Hong Kong go up and down completely randomly.

Pair Corralation between Hang Lung and Hong Kong

If you would invest  71.00  in Hong Kong And on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Hong Kong And or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Hang Lung Properties  vs.  Hong Kong And

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hong Kong And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hong Kong And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Hong Kong is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hang Lung and Hong Kong

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

The idea behind Hang Lung Properties and Hong Kong And 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.