Correlation Between Hwa Fong and Thai Stanley
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and Thai Stanley 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 Thai Stanley 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 Thai Stanley Electric, you can compare the effects of market volatilities on Hwa Fong and Thai Stanley 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 Thai Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and Thai Stanley.
Diversification Opportunities for Hwa Fong and Thai Stanley
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hwa and Thai is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Thai Stanley Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Stanley Electric 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 Thai Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Stanley Electric has no effect on the direction of Hwa Fong i.e., Hwa Fong and Thai Stanley go up and down completely randomly.
Pair Corralation between Hwa Fong and Thai Stanley
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 43.04 times more return on investment than Thai Stanley. However, Hwa Fong is 43.04 times more volatile than Thai Stanley Electric. It trades about 0.06 of its potential returns per unit of risk. Thai Stanley Electric is currently generating about 0.07 per unit of risk. If you would invest 398.00 in Hwa Fong Rubber on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Hwa Fong Rubber or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwa Fong Rubber vs. Thai Stanley Electric
Performance |
| Timeline |
| Hwa Fong Rubber |
| Thai Stanley Electric |
Hwa Fong and Thai Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwa Fong and Thai Stanley
The main advantage of trading using opposite Hwa Fong and Thai Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, Thai Stanley 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 Thai Stanley will offset losses from the drop in Thai Stanley'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 |
| Thai Stanley vs. Hwa Fong Rubber | Thai Stanley vs. AAPICO Hitech Public | Thai Stanley vs. Haad Thip Public | Thai Stanley vs. Italian Thai Development 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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