Correlation Between Professional Computer and Lian Hwa
Can any of the company-specific risk be diversified away by investing in both Professional Computer 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 Professional Computer and Lian Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Professional Computer Technology and Lian Hwa Foods, you can compare the effects of market volatilities on Professional Computer 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 Professional Computer with a short position of Lian Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Professional Computer and Lian Hwa.
Diversification Opportunities for Professional Computer and Lian Hwa
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Professional and Lian is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Professional Computer Technolo 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 Professional Computer 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 Professional Computer Technology 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 Professional Computer i.e., Professional Computer and Lian Hwa go up and down completely randomly.
Pair Corralation between Professional Computer and Lian Hwa
Assuming the 90 days trading horizon Professional Computer is expected to generate 2.94 times less return on investment than Lian Hwa. In addition to that, Professional Computer is 1.57 times more volatile than Lian Hwa Foods. It trades about 0.02 of its total potential returns per unit of risk. Lian Hwa Foods is currently generating about 0.1 per unit of volatility. If you would invest 9,000 in Lian Hwa Foods on November 28, 2024 and sell it today you would earn a total of 7,800 from holding Lian Hwa Foods or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Professional Computer Technolo vs. Lian Hwa Foods
Performance |
| Timeline |
| Professional Computer |
| Lian Hwa Foods |
Professional Computer and Lian Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Professional Computer and Lian Hwa
The main advantage of trading using opposite Professional Computer and Lian Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Professional Computer 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.| Professional Computer vs. Sunspring Metal Corp | Professional Computer vs. Chunghwa Telecom Co | Professional Computer vs. Feng Ching Metal | Professional Computer vs. Chief Telecom |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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