Correlation Between Hartalega Holdings and Sunway Construction

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

By analyzing existing cross correlation between Hartalega Holdings Bhd and Sunway Construction Group, you can compare the effects of market volatilities on Hartalega Holdings and Sunway Construction 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 Hartalega Holdings with a short position of Sunway Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartalega Holdings and Sunway Construction.

Diversification Opportunities for Hartalega Holdings and Sunway Construction

0.15

Correlation Coefficient

Hartalega Holdings  Sunway Construction

Average diversification

The 3 months correlation between Hartalega and Sunway is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hartalega Holdings Bhd and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction and Hartalega Holdings 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 Hartalega Holdings Bhd are associated (or correlated) with Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of Hartalega Holdings i.e., Hartalega Holdings and Sunway Construction go up and down completely randomly.

Pair Corralation between Hartalega Holdings and Sunway Construction

Assuming the 90 days trading horizon Hartalega Holdings Bhd is expected to generate 1.17 times more return on investment than Sunway Construction. However, Hartalega Holdings is 1.17 times more volatile than Sunway Construction Group. It trades about 0.25 of its potential returns per unit of risk. Sunway Construction Group is currently generating about 0.13 per unit of risk. If you would invest  339.00  in Hartalega Holdings Bhd on September 25, 2024 and sell it today you would earn a total of  41.00  from holding Hartalega Holdings Bhd or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Hartalega Holdings Bhd  vs.  Sunway Construction Group

Hartalega Holdings Bhd

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hartalega Holdings Bhd are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Hartalega Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sunway Construction

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunway Construction Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sunway Construction 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 Hartalega Holdings and Sunway Construction

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

The idea behind Hartalega Holdings Bhd and Sunway Construction Group 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.