Correlation Between Lian Hwa and Landis Taipei
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Landis Taipei 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 Landis Taipei 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 Landis Taipei Hotel, you can compare the effects of market volatilities on Lian Hwa and Landis Taipei 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 Landis Taipei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Landis Taipei.
Diversification Opportunities for Lian Hwa and Landis Taipei
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lian and Landis is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Landis Taipei Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landis Taipei Hotel 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 Landis Taipei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landis Taipei Hotel has no effect on the direction of Lian Hwa i.e., Lian Hwa and Landis Taipei go up and down completely randomly.
Pair Corralation between Lian Hwa and Landis Taipei
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 0.66 times more return on investment than Landis Taipei. However, Lian Hwa Foods is 1.51 times less risky than Landis Taipei. It trades about 0.12 of its potential returns per unit of risk. Landis Taipei Hotel is currently generating about -0.09 per unit of risk. If you would invest 11,600 in Lian Hwa Foods on September 2, 2024 and sell it today you would earn a total of 350.00 from holding Lian Hwa Foods or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lian Hwa Foods vs. Landis Taipei Hotel
Performance |
| Timeline |
| Lian Hwa Foods |
| Landis Taipei Hotel |
Lian Hwa and Landis Taipei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Landis Taipei
The main advantage of trading using opposite Lian Hwa and Landis Taipei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Landis Taipei 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 Landis Taipei will offset losses from the drop in Landis Taipei'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 |
| Landis Taipei vs. Tehmag Foods | Landis Taipei vs. TWOWAY Communications | Landis Taipei vs. BRIM Biotechnology | Landis Taipei vs. Lian Hwa Foods |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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