Correlation Between Lian Hwa and Sunmax Biotechnology
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Sunmax Biotechnology 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 Sunmax Biotechnology 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 Sunmax Biotechnology Co, you can compare the effects of market volatilities on Lian Hwa and Sunmax Biotechnology 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 Sunmax Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Sunmax Biotechnology.
Diversification Opportunities for Lian Hwa and Sunmax Biotechnology
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lian and Sunmax is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Sunmax Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunmax Biotechnology 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 Sunmax Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunmax Biotechnology has no effect on the direction of Lian Hwa i.e., Lian Hwa and Sunmax Biotechnology go up and down completely randomly.
Pair Corralation between Lian Hwa and Sunmax Biotechnology
Assuming the 90 days trading horizon Lian Hwa is expected to generate 1.59 times less return on investment than Sunmax Biotechnology. In addition to that, Lian Hwa is 1.3 times more volatile than Sunmax Biotechnology Co. It trades about 0.11 of its total potential returns per unit of risk. Sunmax Biotechnology Co is currently generating about 0.24 per unit of volatility. If you would invest 27,150 in Sunmax Biotechnology Co on September 5, 2024 and sell it today you would earn a total of 1,350 from holding Sunmax Biotechnology Co or generate 4.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lian Hwa Foods vs. Sunmax Biotechnology Co
Performance |
| Timeline |
| Lian Hwa Foods |
| Sunmax Biotechnology |
Lian Hwa and Sunmax Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Sunmax Biotechnology
The main advantage of trading using opposite Lian Hwa and Sunmax Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Sunmax Biotechnology 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 Sunmax Biotechnology will offset losses from the drop in Sunmax Biotechnology's long position.| Lian Hwa vs. Lien Hwa Industrial | Lian Hwa vs. Charoen Pokphand Enterprise | Lian Hwa vs. Great Wall Enterprise | Lian Hwa vs. Uni President Enterprises Corp |
| Sunmax Biotechnology vs. Feature Integration Technology | Sunmax Biotechnology vs. Lian Hwa Foods | Sunmax Biotechnology vs. United Radiant Technology | Sunmax Biotechnology vs. Materials Analysis Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Global Correlations Find global opportunities by holding instruments from different markets |