Correlation Between Aztec Land and Hang Lung

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

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

Diversification Opportunities for Aztec Land and Hang Lung

0.23

Correlation Coefficient

Aztec Land  Hang Lung

Modest diversification

The 3 months correlation between Aztec and Hang is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aztec Land Comb 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 Aztec Land 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 Aztec Land Comb 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 Aztec Land i.e., Aztec Land and Hang Lung go up and down completely randomly.

Pair Corralation between Aztec Land and Hang Lung

Assuming the 90 days horizon Aztec Land Comb is expected to generate 0.5 times more return on investment than Hang Lung. However, Aztec Land Comb is 2.01 times less risky than Hang Lung. It trades about 0.19 of its potential returns per unit of risk. Hang Lung Properties is currently generating about 0.08 per unit of risk. If you would invest  62,000  in Aztec Land Comb on September 4, 2024 and sell it today you would earn a total of  15,500  from holding Aztec Land Comb or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Aztec Land Comb  vs.  Hang Lung Properties

Aztec Land Comb

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Land Comb are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Aztec Land showed solid returns over the last few months and may actually be approaching a breakup point.

Hang Lung Properties

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hang Lung Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Hang Lung showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aztec Land and Hang Lung

The main advantage of trading using opposite Aztec Land and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aztec Land 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 Aztec Land Comb 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.