Correlation Between Newmark and Hang Lung

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

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

Diversification Opportunities for Newmark and Hang Lung

-0.07

Correlation Coefficient

Newmark  Hang Lung

Good diversification

The 3 months correlation between Newmark and Hang is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Newmark Group and Hang Lung Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Properties and Newmark 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 Newmark Group are associated (or correlated) with Hang Lung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hang Lung Properties has no effect on the direction of Newmark i.e., Newmark and Hang Lung go up and down completely randomly.

Pair Corralation between Newmark and Hang Lung

Given the investment horizon of 90 days Newmark Group is expected to under-perform the Hang Lung. In addition to that, Newmark is 1.54 times more volatile than Hang Lung Properties. It trades about -0.02 of its total potential returns per unit of risk. Hang Lung Properties is currently generating about 0.06 per unit of volatility. If you would invest  394.00  in Hang Lung Properties on December 28, 2024 and sell it today you would earn a total of  21.00  from holding Hang Lung Properties or generate 5.33% return on investment over 90 days.

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

Newmark Group  vs.  Hang Lung Properties

Newmark Group

Risk-Adjusted Performance

Very Weak

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

Hang Lung Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Hang Lung is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Newmark and Hang Lung

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

The idea behind Newmark Group and Hang Lung 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.