Correlation Between Ambase Corp and Hang Lung

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

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

Diversification Opportunities for Ambase Corp and Hang Lung

-0.22

Correlation Coefficient

Ambase Corp  Hang Lung

Very good diversification

The 3 months correlation between Ambase and Hang is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ambase Corp 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 Ambase Corp 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 Ambase Corp 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 Ambase Corp i.e., Ambase Corp and Hang Lung go up and down completely randomly.

Pair Corralation between Ambase Corp and Hang Lung

Given the investment horizon of 90 days Ambase Corp is expected to under-perform the Hang Lung. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ambase Corp is 1.21 times less risky than Hang Lung. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Hang Lung Properties is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  336.00  in Hang Lung Properties on September 12, 2024 and sell it today you would earn a total of  93.00  from holding Hang Lung Properties or generate 27.68% return on investment over 90 days.

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

Ambase Corp  vs.  Hang Lung Properties

Ambase Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambase Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hang Lung Properties

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Properties are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hang Lung showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambase Corp and Hang Lung

The main advantage of trading using opposite Ambase Corp and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambase Corp 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 Ambase Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.