Correlation Between Goodyear Public and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both Goodyear Public 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 Goodyear Public and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodyear Public and Hwa Fong Rubber, you can compare the effects of market volatilities on Goodyear Public 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 Goodyear Public with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Public and Hwa Fong.
Diversification Opportunities for Goodyear Public and Hwa Fong
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goodyear and Hwa is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear 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 Goodyear Public 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 Goodyear 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 Goodyear Public i.e., Goodyear Public and Hwa Fong go up and down completely randomly.
Pair Corralation between Goodyear Public and Hwa Fong
Assuming the 90 days trading horizon Goodyear Public is expected to generate 1.62 times more return on investment than Hwa Fong. However, Goodyear Public is 1.62 times more volatile than Hwa Fong Rubber. It trades about 0.25 of its potential returns per unit of risk. Hwa Fong Rubber is currently generating about -0.27 per unit of risk. If you would invest 15,750 in Goodyear Public on August 28, 2024 and sell it today you would earn a total of 1,650 from holding Goodyear Public or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Public vs. Hwa Fong Rubber
Performance |
| Timeline |
| Goodyear Public |
| Hwa Fong Rubber |
Goodyear Public and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Public and Hwa Fong
The main advantage of trading using opposite Goodyear Public and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Public 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.| Goodyear Public vs. Inoue Rubber Public | Goodyear Public vs. Haad Thip Public | Goodyear Public vs. Hwa Fong Rubber | Goodyear Public vs. ICC International Public |
| Hwa Fong vs. SCB X Public | Hwa Fong vs. Kasikornbank Public | Hwa Fong vs. PTT Public | Hwa Fong vs. Kasikornbank 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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