Correlation Between PIE Industrial and Ho Hup

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

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

Diversification Opportunities for PIE Industrial and Ho Hup

0.39

Correlation Coefficient

PIE Industrial  Ho Hup

Weak diversification

The 3 months correlation between PIE and 5169 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Ho Hup Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Hup Construction and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Ho Hup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Hup Construction has no effect on the direction of PIE Industrial i.e., PIE Industrial and Ho Hup go up and down completely randomly.

Pair Corralation between PIE Industrial and Ho Hup

Assuming the 90 days trading horizon PIE Industrial is expected to generate 1.07 times less return on investment than Ho Hup. But when comparing it to its historical volatility, PIE Industrial Bhd is 2.65 times less risky than Ho Hup. It trades about 0.16 of its potential returns per unit of risk. Ho Hup Construction is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Ho Hup Construction on September 15, 2024 and sell it today you would earn a total of  2.00  from holding Ho Hup Construction or generate 14.29% return on investment over 90 days.

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

PIE Industrial Bhd  vs.  Ho Hup Construction

PIE Industrial Bhd

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIE Industrial Bhd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PIE Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ho Hup Construction

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ho Hup Construction are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Ho Hup disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PIE Industrial and Ho Hup

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

The idea behind PIE Industrial Bhd and Ho Hup Construction 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.