Correlation Between CK Power and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both CK Power 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 CK Power and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CK Power Public and Hwa Fong Rubber, you can compare the effects of market volatilities on CK Power 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 CK Power with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Power and Hwa Fong.
Diversification Opportunities for CK Power and Hwa Fong
Average diversification
The 3 months correlation between CKP and Hwa is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public 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 CK Power 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 CK Power Public 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 CK Power i.e., CK Power and Hwa Fong go up and down completely randomly.
Pair Corralation between CK Power and Hwa Fong
Assuming the 90 days trading horizon CK Power Public is expected to under-perform the Hwa Fong. But the stock apears to be less risky and, when comparing its historical volatility, CK Power Public is 25.13 times less risky than Hwa Fong. The stock trades about -0.03 of its potential returns per unit of risk. The Hwa Fong Rubber is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 575.00 in Hwa Fong Rubber on September 1, 2024 and sell it today you would lose (151.00) from holding Hwa Fong Rubber or give up 26.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CK Power Public vs. Hwa Fong Rubber
Performance |
| Timeline |
| CK Power Public |
| Hwa Fong Rubber |
CK Power and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CK Power and Hwa Fong
The main advantage of trading using opposite CK Power and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Power 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.| CK Power vs. Energy Absolute Public | CK Power vs. BCPG Public | CK Power vs. Bangkok Expressway and | CK Power vs. Gulf Energy Development |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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