Correlation Between Hang Lung and GuocoLand

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

By analyzing existing cross correlation between Hang Lung Group and GuocoLand Limited, you can compare the effects of market volatilities on Hang Lung and GuocoLand 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 GuocoLand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hang Lung and GuocoLand.

Diversification Opportunities for Hang Lung and GuocoLand

-0.24

Correlation Coefficient

Hang Lung  GuocoLand

Very good diversification

The 3 months correlation between Hang and GuocoLand is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hang Lung Group and GuocoLand Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GuocoLand Limited 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 Group are associated (or correlated) with GuocoLand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GuocoLand Limited has no effect on the direction of Hang Lung i.e., Hang Lung and GuocoLand go up and down completely randomly.

Pair Corralation between Hang Lung and GuocoLand

Assuming the 90 days horizon Hang Lung Group is expected to generate 7.75 times more return on investment than GuocoLand. However, Hang Lung is 7.75 times more volatile than GuocoLand Limited. It trades about 0.04 of its potential returns per unit of risk. GuocoLand Limited is currently generating about 0.06 per unit of risk. If you would invest  127.00  in Hang Lung Group on December 30, 2024 and sell it today you would earn a total of  5.00  from holding Hang Lung Group or generate 3.94% return on investment over 90 days.

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

Hang Lung Group  vs.  GuocoLand Limited

Hang Lung Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hang Lung is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GuocoLand Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GuocoLand Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GuocoLand is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hang Lung and GuocoLand

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

The idea behind Hang Lung Group and GuocoLand Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.