Correlation Between Hung Sheng and Crowell Development

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

By analyzing existing cross correlation between Hung Sheng Construction and Crowell Development Corp, you can compare the effects of market volatilities on Hung Sheng and Crowell Development 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 Hung Sheng with a short position of Crowell Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hung Sheng and Crowell Development.

Diversification Opportunities for Hung Sheng and Crowell Development

-0.07

Correlation Coefficient

Hung Sheng  Crowell Development

Good diversification

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

Pair Corralation between Hung Sheng and Crowell Development

Assuming the 90 days trading horizon Hung Sheng Construction is expected to generate 0.74 times more return on investment than Crowell Development. However, Hung Sheng Construction is 1.36 times less risky than Crowell Development. It trades about 0.07 of its potential returns per unit of risk. Crowell Development Corp is currently generating about -0.04 per unit of risk. If you would invest  2,530  in Hung Sheng Construction on September 5, 2024 and sell it today you would earn a total of  150.00  from holding Hung Sheng Construction or generate 5.93% return on investment over 90 days.

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

Hung Sheng Construction  vs.  Crowell Development Corp

Hung Sheng Construction

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hung Sheng Construction are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hung Sheng may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Crowell Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crowell Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Crowell Development is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hung Sheng and Crowell Development

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

The idea behind Hung Sheng Construction and Crowell Development Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.