Correlation Between Lian Hwa and Averlogic Technologies
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Averlogic Technologies 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 Averlogic Technologies 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 Averlogic Technologies, you can compare the effects of market volatilities on Lian Hwa and Averlogic Technologies 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 Averlogic Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Averlogic Technologies.
Diversification Opportunities for Lian Hwa and Averlogic Technologies
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lian and Averlogic is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Averlogic Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Averlogic Technologies 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 Averlogic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Averlogic Technologies has no effect on the direction of Lian Hwa i.e., Lian Hwa and Averlogic Technologies go up and down completely randomly.
Pair Corralation between Lian Hwa and Averlogic Technologies
Assuming the 90 days trading horizon Lian Hwa is expected to generate 1.83 times less return on investment than Averlogic Technologies. But when comparing it to its historical volatility, Lian Hwa Foods is 2.43 times less risky than Averlogic Technologies. It trades about 0.1 of its potential returns per unit of risk. Averlogic Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,833 in Averlogic Technologies on September 12, 2024 and sell it today you would earn a total of 2,512 from holding Averlogic Technologies or generate 137.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lian Hwa Foods vs. Averlogic Technologies
Performance |
| Timeline |
| Lian Hwa Foods |
| Averlogic Technologies |
Lian Hwa and Averlogic Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Averlogic Technologies
The main advantage of trading using opposite Lian Hwa and Averlogic Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Averlogic Technologies 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 Averlogic Technologies will offset losses from the drop in Averlogic Technologies' 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 |
| Averlogic Technologies vs. Onyx Healthcare | Averlogic Technologies vs. Phytohealth Corp | Averlogic Technologies vs. Phoenix Silicon International | Averlogic Technologies vs. An Shin Food Services |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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