Correlation Between Hang Lung and Tenaris SA

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

Diversification Opportunities for Hang Lung and Tenaris SA

-0.02

Correlation Coefficient

Hang Lung  Tenaris SA

Good diversification

The 3 months correlation between Hang and Tenaris is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hang Lung Group and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA ADR 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of Hang Lung i.e., Hang Lung and Tenaris SA go up and down completely randomly.

Pair Corralation between Hang Lung and Tenaris SA

Assuming the 90 days horizon Hang Lung Group is expected to generate 1.25 times more return on investment than Tenaris SA. However, Hang Lung is 1.25 times more volatile than Tenaris SA ADR. It trades about 0.13 of its potential returns per unit of risk. Tenaris SA ADR is currently generating about 0.06 per unit of risk. If you would invest  110.00  in Hang Lung Group on December 25, 2024 and sell it today you would earn a total of  17.00  from holding Hang Lung Group or generate 15.45% 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.  Tenaris SA ADR

Hang Lung Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Hang Lung reported solid returns over the last few months and may actually be approaching a breakup point.

Tenaris SA ADR

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Hang Lung and Tenaris SA

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

The idea behind Hang Lung Group and Tenaris SA ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.