Correlation Between Hwa Fong and Lam Soon
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and Lam Soon 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 Lam Soon 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 Lam Soon Public, you can compare the effects of market volatilities on Hwa Fong and Lam Soon 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 Lam Soon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and Lam Soon.
Diversification Opportunities for Hwa Fong and Lam Soon
Almost no diversification
The 3 months correlation between Hwa and Lam is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Lam Soon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Soon 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 Lam Soon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Soon Public has no effect on the direction of Hwa Fong i.e., Hwa Fong and Lam Soon go up and down completely randomly.
Pair Corralation between Hwa Fong and Lam Soon
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 1.01 times more return on investment than Lam Soon. However, Hwa Fong is 1.01 times more volatile than Lam Soon Public. It trades about 0.11 of its potential returns per unit of risk. Lam Soon Public is currently generating about 0.11 per unit of risk. If you would invest 444.00 in Hwa Fong Rubber on August 25, 2024 and sell it today you would lose (20.00) from holding Hwa Fong Rubber or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Hwa Fong Rubber vs. Lam Soon Public
Performance |
| Timeline |
| Hwa Fong Rubber |
| Lam Soon Public |
Hwa Fong and Lam Soon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwa Fong and Lam Soon
The main advantage of trading using opposite Hwa Fong and Lam Soon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, Lam Soon 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 Lam Soon will offset losses from the drop in Lam Soon'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 |
| Lam Soon vs. Haad Thip Public | Lam Soon vs. Hwa Fong Rubber | Lam Soon vs. GFPT Public | Lam Soon vs. KGI Securities 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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