Correlation Between Microbio and Lien Hwa
Can any of the company-specific risk be diversified away by investing in both Microbio and Lien 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 Microbio and Lien Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microbio Co and Lien Hwa Industrial, you can compare the effects of market volatilities on Microbio and Lien 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 Microbio with a short position of Lien Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbio and Lien Hwa.
Diversification Opportunities for Microbio and Lien Hwa
Very poor diversification
The 3 months correlation between Microbio and Lien is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Microbio Co and Lien Hwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Hwa Industrial and Microbio 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 Microbio Co are associated (or correlated) with Lien Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Hwa Industrial has no effect on the direction of Microbio i.e., Microbio and Lien Hwa go up and down completely randomly.
Pair Corralation between Microbio and Lien Hwa
Assuming the 90 days trading horizon Microbio Co is expected to under-perform the Lien Hwa. In addition to that, Microbio is 2.53 times more volatile than Lien Hwa Industrial. It trades about -0.07 of its total potential returns per unit of risk. Lien Hwa Industrial is currently generating about -0.14 per unit of volatility. If you would invest 6,280 in Lien Hwa Industrial on August 28, 2024 and sell it today you would lose (440.00) from holding Lien Hwa Industrial or give up 7.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microbio Co vs. Lien Hwa Industrial
Performance |
| Timeline |
| Microbio |
| Lien Hwa Industrial |
Microbio and Lien Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microbio and Lien Hwa
The main advantage of trading using opposite Microbio and Lien Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbio position performs unexpectedly, Lien 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 Lien Hwa will offset losses from the drop in Lien Hwa's long position.| Microbio vs. Uni President Enterprises Corp | Microbio vs. Lien Hwa Industrial | Microbio vs. Great Wall Enterprise | Microbio vs. Standard Foods Corp |
| Lien Hwa vs. Great Wall Enterprise | Lien Hwa vs. Lian Hwa Foods | Lien Hwa vs. Charoen Pokphand Enterprise | Lien 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |