Correlation Between An Shin and Lian Hwa
Can any of the company-specific risk be diversified away by investing in both An Shin and Lian Hwa 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 An Shin and Lian Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between An Shin Food Services and Lian Hwa Foods, you can compare the effects of market volatilities on An Shin and Lian Hwa 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 An Shin with a short position of Lian Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of An Shin and Lian Hwa.
Diversification Opportunities for An Shin and Lian Hwa
Very good diversification
The 3 months correlation between 1259 and Lian is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding An Shin Food Services and Lian Hwa Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lian Hwa Foods and An Shin 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 An Shin Food Services are associated (or correlated) with Lian Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lian Hwa Foods has no effect on the direction of An Shin i.e., An Shin and Lian Hwa go up and down completely randomly.
Pair Corralation between An Shin and Lian Hwa
Assuming the 90 days trading horizon An Shin is expected to generate 4.3 times less return on investment than Lian Hwa. But when comparing it to its historical volatility, An Shin Food Services is 2.51 times less risky than Lian Hwa. It trades about 0.18 of its potential returns per unit of risk. Lian Hwa Foods is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 15,000 in Lian Hwa Foods on November 28, 2024 and sell it today you would earn a total of 1,800 from holding Lian Hwa Foods or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
An Shin Food Services vs. Lian Hwa Foods
Performance |
| Timeline |
| An Shin Food |
| Lian Hwa Foods |
An Shin and Lian Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with An Shin and Lian Hwa
The main advantage of trading using opposite An Shin and Lian Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if An Shin position performs unexpectedly, Lian Hwa 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 Lian Hwa will offset losses from the drop in Lian Hwa's long position.| An Shin vs. International CSRC Investment | An Shin vs. Onyx Healthcare | An Shin vs. Taiwan Speciality Chemicals | An Shin vs. China Airlines |
| 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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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