Correlation Between Lian Hwa and Xintec
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Xintec 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 Lian Hwa and Xintec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lian Hwa Foods and Xintec, you can compare the effects of market volatilities on Lian Hwa and Xintec 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 Lian Hwa with a short position of Xintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Xintec.
Diversification Opportunities for Lian Hwa and Xintec
Excellent diversification
The 3 months correlation between Lian and Xintec is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and Lian 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 Lian Hwa Foods are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Lian Hwa i.e., Lian Hwa and Xintec go up and down completely randomly.
Pair Corralation between Lian Hwa and Xintec
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 0.5 times more return on investment than Xintec. However, Lian Hwa Foods is 2.01 times less risky than Xintec. It trades about 0.11 of its potential returns per unit of risk. Xintec is currently generating about 0.05 per unit of risk. If you would invest 10,600 in Lian Hwa Foods on September 13, 2024 and sell it today you would earn a total of 2,800 from holding Lian Hwa Foods or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Lian Hwa Foods vs. Xintec
Performance |
| Timeline |
| Lian Hwa Foods |
| Xintec |
Lian Hwa and Xintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Xintec
The main advantage of trading using opposite Lian Hwa and Xintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Xintec 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 Xintec will offset losses from the drop in Xintec's long position.| Lian Hwa vs. Standard Foods Corp | Lian Hwa vs. Uni President Enterprises Corp | Lian Hwa vs. Great Wall Enterprise | Lian Hwa vs. Ruentex Development Co |
| Xintec vs. AU Optronics | Xintec vs. Innolux Corp | Xintec vs. Ruentex Development Co | Xintec vs. WiseChip Semiconductor |
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 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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