Correlation Between Oneconnect Financial and HeartCore Enterprises

Can any of the company-specific risk be diversified away by investing in both Oneconnect Financial and HeartCore Enterprises 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 Oneconnect Financial and HeartCore Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oneconnect Financial Technology and HeartCore Enterprises, you can compare the effects of market volatilities on Oneconnect Financial and HeartCore Enterprises 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 Oneconnect Financial with a short position of HeartCore Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oneconnect Financial and HeartCore Enterprises.

Diversification Opportunities for Oneconnect Financial and HeartCore Enterprises

0.22

Correlation Coefficient

Oneconnect Financial  HeartCore Enterprises

Modest diversification

The 3 months correlation between Oneconnect and HeartCore is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Oneconnect Financial Technolog and HeartCore Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeartCore Enterprises and Oneconnect Financial 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 Oneconnect Financial Technology are associated (or correlated) with HeartCore Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeartCore Enterprises has no effect on the direction of Oneconnect Financial i.e., Oneconnect Financial and HeartCore Enterprises go up and down completely randomly.

Pair Corralation between Oneconnect Financial and HeartCore Enterprises

Given the investment horizon of 90 days Oneconnect Financial Technology is expected to generate 1.69 times more return on investment than HeartCore Enterprises. However, Oneconnect Financial is 1.69 times more volatile than HeartCore Enterprises. It trades about 0.14 of its potential returns per unit of risk. HeartCore Enterprises is currently generating about 0.21 per unit of risk. If you would invest  129.00  in Oneconnect Financial Technology on September 19, 2024 and sell it today you would earn a total of  116.00  from holding Oneconnect Financial Technology or generate 89.92% return on investment over 90 days.

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

Oneconnect Financial Technolog  vs.  HeartCore Enterprises

Oneconnect Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oneconnect Financial Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Oneconnect Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

HeartCore Enterprises

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HeartCore Enterprises are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, HeartCore Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oneconnect Financial and HeartCore Enterprises

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

The idea behind Oneconnect Financial Technology and HeartCore Enterprises 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.