Correlation Between Hwa Fong and Home Product
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and Home Product 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 Home Product 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 Home Product Center, you can compare the effects of market volatilities on Hwa Fong and Home Product 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 Home Product. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and Home Product.
Diversification Opportunities for Hwa Fong and Home Product
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hwa and Home is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Home Product Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Product Center 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 Home Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Product Center has no effect on the direction of Hwa Fong i.e., Hwa Fong and Home Product go up and down completely randomly.
Pair Corralation between Hwa Fong and Home Product
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 0.47 times more return on investment than Home Product. However, Hwa Fong Rubber is 2.12 times less risky than Home Product. It trades about 0.14 of its potential returns per unit of risk. Home Product Center is currently generating about 0.04 per unit of risk. If you would invest 412.00 in Hwa Fong Rubber on October 20, 2024 and sell it today you would earn a total of 14.00 from holding Hwa Fong Rubber or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwa Fong Rubber vs. Home Product Center
Performance |
| Timeline |
| Hwa Fong Rubber |
| Home Product Center |
Hwa Fong and Home Product Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwa Fong and Home Product
The main advantage of trading using opposite Hwa Fong and Home Product positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, Home Product 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 Home Product will offset losses from the drop in Home Product'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 |
| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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