Correlation Between Advanced Connection and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both Advanced Connection and Hwa Fong 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 Advanced Connection and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Connection and Hwa Fong Rubber, you can compare the effects of market volatilities on Advanced Connection and Hwa Fong 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 Advanced Connection with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Connection and Hwa Fong.
Diversification Opportunities for Advanced Connection and Hwa Fong
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Hwa is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Connection and Hwa Fong Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwa Fong Rubber and Advanced Connection 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 Advanced Connection are associated (or correlated) with Hwa Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwa Fong Rubber has no effect on the direction of Advanced Connection i.e., Advanced Connection and Hwa Fong go up and down completely randomly.
Pair Corralation between Advanced Connection and Hwa Fong
Assuming the 90 days trading horizon Advanced Connection is expected to generate 16.37 times less return on investment than Hwa Fong. But when comparing it to its historical volatility, Advanced Connection is 11.67 times less risky than Hwa Fong. It trades about 0.04 of its potential returns per unit of risk. Hwa Fong Rubber is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Hwa Fong Rubber on September 14, 2024 and sell it today you would earn a total of 18.00 from holding Hwa Fong Rubber or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Connection vs. Hwa Fong Rubber
Performance |
| Timeline |
| Advanced Connection |
| Hwa Fong Rubber |
Advanced Connection and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Connection and Hwa Fong
The main advantage of trading using opposite Advanced Connection and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Connection position performs unexpectedly, Hwa Fong 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 Hwa Fong will offset losses from the drop in Hwa Fong's long position.| Advanced Connection vs. Hwa Fong Rubber | Advanced Connection vs. AAPICO Hitech Public | Advanced Connection vs. Haad Thip Public | Advanced Connection vs. Italian Thai Development Public |
| Hwa Fong vs. Haad Thip Public | Hwa Fong vs. AAPICO Hitech Public | Hwa Fong vs. Inoue Rubber Public | Hwa Fong vs. Hana Microelectronics Public |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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