Correlation Between Hwa Fong and CIMB Thai
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and CIMB Thai 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 CIMB Thai 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 CIMB Thai Bank, you can compare the effects of market volatilities on Hwa Fong and CIMB Thai 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 CIMB Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and CIMB Thai.
Diversification Opportunities for Hwa Fong and CIMB Thai
Modest diversification
The 3 months correlation between Hwa and CIMB is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and CIMB Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB Thai Bank 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 CIMB Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB Thai Bank has no effect on the direction of Hwa Fong i.e., Hwa Fong and CIMB Thai go up and down completely randomly.
Pair Corralation between Hwa Fong and CIMB Thai
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 1.0 times more return on investment than CIMB Thai. However, Hwa Fong Rubber is 1.0 times less risky than CIMB Thai. It trades about 0.05 of its potential returns per unit of risk. CIMB Thai Bank is currently generating about 0.05 per unit of risk. If you would invest 391.00 in Hwa Fong Rubber on September 12, 2024 and sell it today you would earn a total of 23.00 from holding Hwa Fong Rubber or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwa Fong Rubber vs. CIMB Thai Bank
Performance |
| Timeline |
| Hwa Fong Rubber |
| CIMB Thai Bank |
Hwa Fong and CIMB Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwa Fong and CIMB Thai
The main advantage of trading using opposite Hwa Fong and CIMB Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, CIMB Thai 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 CIMB Thai will offset losses from the drop in CIMB Thai's long position.| Hwa Fong vs. Haad Thip Public | Hwa Fong vs. AAPICO Hitech Public | Hwa Fong vs. Inoue Rubber Public | Hwa Fong vs. Hana Microelectronics Public |
| CIMB Thai vs. KGI Securities Public | CIMB Thai vs. Lalin Property Public | CIMB Thai vs. Hwa Fong Rubber | CIMB Thai vs. MCS Steel 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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