Correlation Between Poya International and Lien Hwa
Can any of the company-specific risk be diversified away by investing in both Poya International 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 Poya International and Lien Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poya International Co and Lien Hwa Industrial, you can compare the effects of market volatilities on Poya International 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 Poya International with a short position of Lien Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poya International and Lien Hwa.
Diversification Opportunities for Poya International and Lien Hwa
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Poya and Lien is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Poya International 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 Poya International 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 Poya International 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 Poya International i.e., Poya International and Lien Hwa go up and down completely randomly.
Pair Corralation between Poya International and Lien Hwa
Assuming the 90 days trading horizon Poya International Co is expected to under-perform the Lien Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Poya International Co is 1.48 times less risky than Lien Hwa. The stock trades about -0.35 of its potential returns per unit of risk. The Lien Hwa Industrial is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 5,980 in Lien Hwa Industrial on August 31, 2024 and sell it today you would lose (210.00) from holding Lien Hwa Industrial or give up 3.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Poya International Co vs. Lien Hwa Industrial
Performance |
| Timeline |
| Poya International |
| Lien Hwa Industrial |
Poya International and Lien Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poya International and Lien Hwa
The main advantage of trading using opposite Poya International and Lien Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poya International 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.| Poya International vs. Chaintech Technology Corp | Poya International vs. AVerMedia Technologies | Poya International vs. Avision | Poya International vs. Clevo Co |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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