Correlation Between Sino Land and Hang Lung

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

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

Diversification Opportunities for Sino Land and Hang Lung

0.59

Correlation Coefficient

Sino Land  Hang Lung

Very weak diversification

The 3 months correlation between Sino and Hang is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sino Land Co 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 Sino Land 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 Sino Land Co 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 Sino Land i.e., Sino Land and Hang Lung go up and down completely randomly.

Pair Corralation between Sino Land and Hang Lung

Assuming the 90 days horizon Sino Land is expected to generate 11.45 times less return on investment than Hang Lung. But when comparing it to its historical volatility, Sino Land Co is 1.03 times less risky than Hang Lung. It trades about 0.0 of its potential returns per unit of risk. Hang Lung Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  390.00  in Hang Lung Properties on October 26, 2024 and sell it today you would earn a total of  3.00  from holding Hang Lung Properties or generate 0.77% return on investment over 90 days.

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

Sino Land Co  vs.  Hang Lung Properties

Sino Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sino Land is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hang Lung Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hang Lung Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sino Land and Hang Lung

The main advantage of trading using opposite Sino Land and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino Land 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 Sino Land Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.