Correlation Between Steel Public and Heng Leasing

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

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

Diversification Opportunities for Steel Public and Heng Leasing

-0.05

Correlation Coefficient

Steel Public  Heng Leasing

Good diversification

The 3 months correlation between Steel and Heng is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Steel Public 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 Steel Public 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 The Steel Public 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 Steel Public i.e., Steel Public and Heng Leasing go up and down completely randomly.

Pair Corralation between Steel Public and Heng Leasing

Assuming the 90 days trading horizon The Steel Public is expected to under-perform the Heng Leasing. In addition to that, Steel Public is 1.49 times more volatile than Heng Leasing Capital. It trades about -0.06 of its total potential returns per unit of risk. Heng Leasing Capital is currently generating about -0.01 per unit of volatility. If you would invest  107.00  in Heng Leasing Capital on December 29, 2024 and sell it today you would lose (3.00) from holding Heng Leasing Capital or give up 2.8% of portfolio value over 90 days.

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

The Steel Public  vs.  Heng Leasing Capital

Steel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Heng Leasing Capital

Risk-Adjusted Performance

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 Steel Public and Heng Leasing

The main advantage of trading using opposite Steel Public and Heng Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Public 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 The Steel Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.