Correlation Between Lian Hwa and Ennoconn Corp
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Ennoconn Corp 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 Ennoconn Corp 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 Ennoconn Corp, you can compare the effects of market volatilities on Lian Hwa and Ennoconn Corp 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 Ennoconn Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Ennoconn Corp.
Diversification Opportunities for Lian Hwa and Ennoconn Corp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lian and Ennoconn is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Ennoconn Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennoconn Corp 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 Ennoconn Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennoconn Corp has no effect on the direction of Lian Hwa i.e., Lian Hwa and Ennoconn Corp go up and down completely randomly.
Pair Corralation between Lian Hwa and Ennoconn Corp
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 0.9 times more return on investment than Ennoconn Corp. However, Lian Hwa Foods is 1.12 times less risky than Ennoconn Corp. It trades about 0.13 of its potential returns per unit of risk. Ennoconn Corp is currently generating about 0.11 per unit of risk. If you would invest 10,750 in Lian Hwa Foods on August 28, 2024 and sell it today you would earn a total of 1,100 from holding Lian Hwa Foods or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lian Hwa Foods vs. Ennoconn Corp
Performance |
| Timeline |
| Lian Hwa Foods |
| Ennoconn Corp |
Lian Hwa and Ennoconn Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Ennoconn Corp
The main advantage of trading using opposite Lian Hwa and Ennoconn Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Ennoconn Corp 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 Ennoconn Corp will offset losses from the drop in Ennoconn Corp'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 |
| Ennoconn Corp vs. Advantech Co | Ennoconn Corp vs. Zhen Ding Technology | Ennoconn Corp vs. General Interface Solution | Ennoconn Corp vs. Hiwin Technologies Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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