Correlation Between Country Group and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both Country Group 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 Country Group and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Country Group Holdings and Hwa Fong Rubber, you can compare the effects of market volatilities on Country Group 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 Country Group with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Country Group and Hwa Fong.
Diversification Opportunities for Country Group and Hwa Fong
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Country and Hwa is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Country Group Holdings 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 Country Group 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 Country Group Holdings 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 Country Group i.e., Country Group and Hwa Fong go up and down completely randomly.
Pair Corralation between Country Group and Hwa Fong
Assuming the 90 days trading horizon Country Group Holdings is expected to generate 1.0 times more return on investment than Hwa Fong. However, Country Group is 1.0 times more volatile than Hwa Fong Rubber. It trades about 0.04 of its potential returns per unit of risk. Hwa Fong Rubber is currently generating about 0.04 per unit of risk. If you would invest 94.00 in Country Group Holdings on September 1, 2024 and sell it today you would lose (26.00) from holding Country Group Holdings or give up 27.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Country Group Holdings vs. Hwa Fong Rubber
Performance |
| Timeline |
| Country Group Holdings |
| Hwa Fong Rubber |
Country Group and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Country Group and Hwa Fong
The main advantage of trading using opposite Country Group and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Country Group 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.| Country Group vs. Asia Plus Group | Country Group vs. Globlex Holding Management | Country Group vs. Asia Green Energy | Country Group vs. Amanah Leasing Public |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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