Correlation Between MFC Industrial and Heng Leasing

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

By analyzing existing cross correlation between MFC Industrial Investment and Heng Leasing Capital, you can compare the effects of market volatilities on MFC Industrial and Heng Leasing 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 MFC Industrial with a short position of Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and Heng Leasing.

Diversification Opportunities for MFC Industrial and Heng Leasing

-0.54

Correlation Coefficient

MFC Industrial  Heng Leasing

Excellent diversification

The 3 months correlation between MFC and Heng is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Investment and Heng Leasing Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heng Leasing Capital and MFC Industrial 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 MFC Industrial Investment are associated (or correlated) with Heng Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heng Leasing Capital has no effect on the direction of MFC Industrial i.e., MFC Industrial and Heng Leasing go up and down completely randomly.

Pair Corralation between MFC Industrial and Heng Leasing

Assuming the 90 days trading horizon MFC Industrial Investment is expected to generate 0.25 times more return on investment than Heng Leasing. However, MFC Industrial Investment is 4.02 times less risky than Heng Leasing. It trades about 0.22 of its potential returns per unit of risk. Heng Leasing Capital is currently generating about -0.01 per unit of risk. If you would invest  557.00  in MFC Industrial Investment on September 4, 2024 and sell it today you would earn a total of  78.00  from holding MFC Industrial Investment or generate 14.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

MFC Industrial Investment  vs.  Heng Leasing Capital

MFC Industrial Investment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Industrial Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, MFC Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Heng Leasing Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heng Leasing Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Heng Leasing is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MFC Industrial and Heng Leasing

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

The idea behind MFC Industrial Investment and Heng Leasing Capital 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.