Correlation Between Lien Hwa and TTET Union
Can any of the company-specific risk be diversified away by investing in both Lien Hwa and TTET Union 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 TTET Union 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 TTET Union Corp, you can compare the effects of market volatilities on Lien Hwa and TTET Union 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 TTET Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lien Hwa and TTET Union.
Diversification Opportunities for Lien Hwa and TTET Union
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lien and TTET is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lien Hwa Industrial and TTET Union Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTET Union Corp 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 TTET Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTET Union Corp has no effect on the direction of Lien Hwa i.e., Lien Hwa and TTET Union go up and down completely randomly.
Pair Corralation between Lien Hwa and TTET Union
Assuming the 90 days trading horizon Lien Hwa Industrial is expected to under-perform the TTET Union. In addition to that, Lien Hwa is 2.03 times more volatile than TTET Union Corp. It trades about -0.34 of its total potential returns per unit of risk. TTET Union Corp is currently generating about -0.17 per unit of volatility. If you would invest 15,500 in TTET Union Corp on October 22, 2024 and sell it today you would lose (950.00) from holding TTET Union Corp or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lien Hwa Industrial vs. TTET Union Corp
Performance |
| Timeline |
| Lien Hwa Industrial |
| TTET Union Corp |
Lien Hwa and TTET Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lien Hwa and TTET Union
The main advantage of trading using opposite Lien Hwa and TTET Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lien Hwa position performs unexpectedly, TTET Union 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 TTET Union will offset losses from the drop in TTET Union's 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 |
| TTET Union vs. Charoen Pokphand Enterprise | TTET Union vs. Standard Foods Corp | TTET Union vs. Uni President Enterprises Corp | TTET Union vs. Great Wall Enterprise |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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