Correlation Between Lian Hwa and Symtek Automation
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Symtek Automation 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 Symtek Automation 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 Symtek Automation Asia, you can compare the effects of market volatilities on Lian Hwa and Symtek Automation 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 Symtek Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Symtek Automation.
Diversification Opportunities for Lian Hwa and Symtek Automation
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lian and Symtek is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Symtek Automation Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symtek Automation Asia 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 Symtek Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symtek Automation Asia has no effect on the direction of Lian Hwa i.e., Lian Hwa and Symtek Automation go up and down completely randomly.
Pair Corralation between Lian Hwa and Symtek Automation
Assuming the 90 days trading horizon Lian Hwa is expected to generate 1.99 times less return on investment than Symtek Automation. But when comparing it to its historical volatility, Lian Hwa Foods is 2.8 times less risky than Symtek Automation. It trades about 0.18 of its potential returns per unit of risk. Symtek Automation Asia is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 20,450 in Symtek Automation Asia on August 28, 2024 and sell it today you would earn a total of 2,000 from holding Symtek Automation Asia or generate 9.78% 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. Symtek Automation Asia
Performance |
| Timeline |
| Lian Hwa Foods |
| Symtek Automation Asia |
Lian Hwa and Symtek Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Symtek Automation
The main advantage of trading using opposite Lian Hwa and Symtek Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Symtek Automation 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 Symtek Automation will offset losses from the drop in Symtek Automation'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 |
| Symtek Automation vs. Golden Friends | Symtek Automation vs. Sunonwealth Electric Machine | Symtek Automation vs. Rechi Precision Co | Symtek Automation vs. C Sun Manufacturing |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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