Correlation Between Hwa Fong and AJ Plast
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and AJ Plast 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 Hwa Fong and AJ Plast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hwa Fong Rubber and AJ Plast Public, you can compare the effects of market volatilities on Hwa Fong and AJ Plast 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 Hwa Fong with a short position of AJ Plast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and AJ Plast.
Diversification Opportunities for Hwa Fong and AJ Plast
Almost no diversification
The 3 months correlation between Hwa and AJ Plast is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and AJ Plast Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Plast Public and Hwa Fong 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 Hwa Fong Rubber are associated (or correlated) with AJ Plast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Plast Public has no effect on the direction of Hwa Fong i.e., Hwa Fong and AJ Plast go up and down completely randomly.
Pair Corralation between Hwa Fong and AJ Plast
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to under-perform the AJ Plast. In addition to that, Hwa Fong is 1.21 times more volatile than AJ Plast Public. It trades about -0.26 of its total potential returns per unit of risk. AJ Plast Public is currently generating about -0.21 per unit of volatility. If you would invest 505.00 in AJ Plast Public on September 1, 2024 and sell it today you would lose (25.00) from holding AJ Plast Public or give up 4.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwa Fong Rubber vs. AJ Plast Public
Performance |
| Timeline |
| Hwa Fong Rubber |
| AJ Plast Public |
Hwa Fong and AJ Plast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwa Fong and AJ Plast
The main advantage of trading using opposite Hwa Fong and AJ Plast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, AJ Plast 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 AJ Plast will offset losses from the drop in AJ Plast's long position.| Hwa Fong vs. TRC Construction Public | Hwa Fong vs. Bangkok Expressway and | Hwa Fong vs. Lohakit Metal Public | Hwa Fong vs. Gunkul Engineering 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 CEOs Directory module to screen CEOs from public companies around the world.
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