Correlation Between Union Pacific and Hang Lung

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

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

Diversification Opportunities for Union Pacific and Hang Lung

-0.02
  Correlation Coefficient
Union Pacific Corp
Hang Lung Ppy

Good diversification

The 3 months correlation between Union and HLPPY is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Union Pacific Corp and Hang Lung Ppy in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Hang Lung Ppy and Union Pacific 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 Union Pacific 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 Ppy has no effect on the direction of Union Pacific i.e., Union Pacific and Hang Lung go up and down completely randomly.

Pair Corralation between Union Pacific and Hang Lung

Considering the 90-day investment horizon Union Pacific Corp is expected to generate 0.75 times more return on investment than Hang Lung. However, Union Pacific Corp is 1.32 times less risky than Hang Lung. It trades about 0.31 of its potential returns per unit of risk. Hang Lung Ppy is currently generating about -0.2 per unit of risk. If you would invest  20,551  in Union Pacific Corp on September 2, 2021 and sell it today you would earn a total of  3,162  from holding Union Pacific Corp or generate 15.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Union Pacific Corp  vs.  Hang Lung Ppy

 Performance (%) 
      Timeline 
Union Pacific Corp 
Union Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Union Pacific Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Union Pacific may actually be approaching a critical reversion point that can send shares even higher in January 2022.

Union Price Channel

Hang Lung Ppy 
HLPPY Performance
0 of 100
Over the last 90 days Hang Lung Ppy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

HLPPY Price Channel

Union Pacific and Hang Lung Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Union Pacific and Hang Lung

The main advantage of trading using opposite Union Pacific and Hang Lung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Pacific 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 Union Pacific Corp and Hang Lung Ppy 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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