Correlation Between Lien Hwa and Oceanic Beverages
Can any of the company-specific risk be diversified away by investing in both Lien Hwa and Oceanic Beverages 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 Lien Hwa and Oceanic Beverages into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lien Hwa Industrial and Oceanic Beverages Co, you can compare the effects of market volatilities on Lien Hwa and Oceanic Beverages 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 Lien Hwa with a short position of Oceanic Beverages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lien Hwa and Oceanic Beverages.
Diversification Opportunities for Lien Hwa and Oceanic Beverages
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lien and Oceanic is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lien Hwa Industrial and Oceanic Beverages Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Beverages and Lien Hwa 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 Lien Hwa Industrial are associated (or correlated) with Oceanic Beverages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Beverages has no effect on the direction of Lien Hwa i.e., Lien Hwa and Oceanic Beverages go up and down completely randomly.
Pair Corralation between Lien Hwa and Oceanic Beverages
Assuming the 90 days trading horizon Lien Hwa Industrial is expected to under-perform the Oceanic Beverages. But the stock apears to be less risky and, when comparing its historical volatility, Lien Hwa Industrial is 1.62 times less risky than Oceanic Beverages. The stock trades about -0.08 of its potential returns per unit of risk. The Oceanic Beverages Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Oceanic Beverages Co on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Oceanic Beverages Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lien Hwa Industrial vs. Oceanic Beverages Co
Performance |
| Timeline |
| Lien Hwa Industrial |
| Oceanic Beverages |
Lien Hwa and Oceanic Beverages Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lien Hwa and Oceanic Beverages
The main advantage of trading using opposite Lien Hwa and Oceanic Beverages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lien Hwa position performs unexpectedly, Oceanic Beverages 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 Oceanic Beverages will offset losses from the drop in Oceanic Beverages' long position.| Lien Hwa vs. Great Wall Enterprise | Lien Hwa vs. Lian Hwa Foods | Lien Hwa vs. Charoen Pokphand Enterprise | Lien Hwa vs. Uni President Enterprises Corp |
| Oceanic Beverages vs. De Licacy Industrial | Oceanic Beverages vs. Wisher Industrial Co | Oceanic Beverages vs. Tainan Enterprises Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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