Correlation Between Hang Lung and Stratus Properties

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

Diversification Opportunities for Hang Lung and Stratus Properties

-0.5

Correlation Coefficient

Hang Lung  Stratus Properties

Very good diversification

The 3 months correlation between Hang and Stratus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hang Lung Group and Stratus Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratus Properties 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 Stratus Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratus Properties has no effect on the direction of Hang Lung i.e., Hang Lung and Stratus Properties go up and down completely randomly.

Pair Corralation between Hang Lung and Stratus Properties

Assuming the 90 days horizon Hang Lung Group is expected to generate 0.97 times more return on investment than Stratus Properties. However, Hang Lung Group is 1.03 times less risky than Stratus Properties. It trades about 0.03 of its potential returns per unit of risk. Stratus Properties is currently generating about -0.08 per unit of risk. If you would invest  672.00  in Hang Lung Group on December 20, 2024 and sell it today you would earn a total of  18.00  from holding Hang Lung Group or generate 2.68% return on investment over 90 days.

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

Hang Lung Group  vs.  Stratus Properties

Hang Lung Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Hang Lung is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stratus Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stratus Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hang Lung and Stratus Properties

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

The idea behind Hang Lung Group and Stratus Properties 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.