Correlation Between Lian Hwa and Antec
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Antec 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 Antec 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 Antec Inc, you can compare the effects of market volatilities on Lian Hwa and Antec 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 Antec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Antec.
Diversification Opportunities for Lian Hwa and Antec
Excellent diversification
The 3 months correlation between Lian and Antec is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Antec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antec Inc 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 Antec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antec Inc has no effect on the direction of Lian Hwa i.e., Lian Hwa and Antec go up and down completely randomly.
Pair Corralation between Lian Hwa and Antec
Assuming the 90 days trading horizon Lian Hwa is expected to generate 1.91 times less return on investment than Antec. But when comparing it to its historical volatility, Lian Hwa Foods is 3.44 times less risky than Antec. It trades about 0.1 of its potential returns per unit of risk. Antec Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,676 in Antec Inc on September 12, 2024 and sell it today you would earn a total of 1,704 from holding Antec Inc or generate 101.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lian Hwa Foods vs. Antec Inc
Performance |
| Timeline |
| Lian Hwa Foods |
| Antec Inc |
Lian Hwa and Antec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Antec
The main advantage of trading using opposite Lian Hwa and Antec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Antec 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 Antec will offset losses from the drop in Antec'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 |
| Antec vs. Galaxy Software Services | Antec vs. Sitronix Technology Corp | Antec vs. C Media Electronics | Antec vs. Softstar Entertainment |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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