Correlation Between Hwa Fong and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Hwa Fong and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and Dow Jones.
Diversification Opportunities for Hwa Fong and Dow Jones
Significant diversification
The 3 months correlation between Hwa and Dow is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Hwa Fong i.e., Hwa Fong and Dow Jones go up and down completely randomly.
Pair Corralation between Hwa Fong and Dow Jones
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 85.77 times more return on investment than Dow Jones. However, Hwa Fong is 85.77 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 per unit of risk. If you would invest 391.00 in Hwa Fong Rubber on August 25, 2024 and sell it today you would earn a total of 33.00 from holding Hwa Fong Rubber or generate 8.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.55% |
| Values | Daily Returns |
Hwa Fong Rubber vs. Dow Jones Industrial
Performance |
| Timeline |
Hwa Fong and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Hwa Fong Rubber
Pair trading matchups for Hwa Fong
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Hwa Fong and Dow Jones
The main advantage of trading using opposite Hwa Fong and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Hwa Fong vs. SCB X Public | Hwa Fong vs. Kasikornbank Public | Hwa Fong vs. PTT Public | Hwa Fong vs. Kasikornbank Public |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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