Posts tagged ‘Tracker Fund 盈富基金 (02800.HK)’

Mike TysonHow would you like to fight in the ring with the legendary Mike Tyson?  99% rational minded persons would opt NOT to fight Mr. Tyson.

 

 

Some compare successful investing with that of a successful boxer, where you have to:

 

 

 

 

  • Avoid the knock outs (avoiding taking silly risks + high doses of leverage)
  • Find a way to outlast your opponent (stopping losses)
  • Sticking with your strategy

When dealing with the unknown, the idea of stopping losses is ever more important as it helps to keep us in the game for a longer period of time.

When the market is trending downwards, even if you are very skilled at stock picking, its very very hard to outperform.  Conversely, if the market is trending upwards, even the amateur with the least amount of knowledge will be able to make some money.  So the proper idea is probably to first get the trend right, and then depending on your skill to pick investments, to invest in the market (ETFs such as Tracker Fund HK2800), or pick individual securities.

I guess no one would really take the offer to fight. 🙂  But my guess is most people would continue to buy or sell securities as usual tomorrow and into the future. 🙂

 

-Mr. Alpha

 

Picture from the below link:

http://sportsillustrated.cnn.com/multimedia/photo_gallery/1012/boxing.hall.of.fame.2011.inductees/content.2.html

During times of high market volatility, investors may typically ask, “what kind of strategy should I follow?” or “which stocks should I be buying and selling”?  Using the concept of statistical regression between individual stock and market returns, we can begin thinking about these questions using the concept of “Beta” from the Capital Asset Pricing Model (CAPM).

Beta is a measure of the sensitivity of individual stock returns to market returns.  A stock like HK2800 (Tracker Fund) would have a beta close to 1.  A Beta significantly higher than 1 indicates that a stock may rise or fall more sharply than the market index.  A Beta significantly less than 1 indicates that the individual stock returns do not move in the same direction as how the market moves.

 

Top 5 High Beta stocks:

Stocks Beta
中國智能交通 CHINA ITS (01900.HK) 3.67
華耐控股 SINOREF HLDGS (01020.HK) 2.58
卡姆丹克太陽能 COMTEC SOLAR (00712.HK) 2.6
珠江鋼管 CHU KONG PIPE (01938.HK) 2.52
旭光高新材料 LUMENA NEWMAT (00067.HK) 2.5

 

For high Beta stocks, if an investor had a view that the market is trending upwards in the short term, buying high beta stocks may lead to higher gains.  But under the current highly volatile environment, investors may be better off simply to avoid high beta exposure, as these are the names that may drop more significantly than the market.  What is also notable is that in the high beta list, China property developers tend to show up further down the list of top 50 high beta names.

 

Top 5 Low Beta stocks:

Stocks Beta
中電控股 CLP HOLDINGS (00002.HK) 0.1
電能實業 POWER ASSETS (00006.HK) 0.12
領匯房產基金 LINK REIT (00823.HK) 0.21
長江基建集團 CKI HOLDINGS (01038.HK) 0.22
和記電訊香港 HUTCHTEL HK (00215.HK) 0.24

 

Under the current highly volatile environment, investors may be better off to have low Beta exposure as a cornerstone security to build a defensive portfolio.  As always, comments and feedback are welcome!

 

Mr. Alpha

 

Here are some Return Stats for Tracker Fund (02800.HK) vs HSI:

  • Correlation Coefficient (R) = 1
  • Slope (Regressed Beta) close to 1
  • Y-Intercept (Regressed Alpha) close to 0

This is a good way to calibrate and validate the regression results!

Linear Regression: Return of 盈富基金 Tracker Fund (02800.HK) vs HSI Return

Linear Regression: Return of Tracker Fund (02800.HK) vs HSI Return

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-Mr. Alpha

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