Correlation Between Hwa Fong and TRC Construction
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and TRC Construction 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 TRC Construction 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 TRC Construction Public, you can compare the effects of market volatilities on Hwa Fong and TRC Construction 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 TRC Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and TRC Construction.
Diversification Opportunities for Hwa Fong and TRC Construction
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hwa and TRC is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and TRC Construction Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRC Construction 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 TRC Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRC Construction Public has no effect on the direction of Hwa Fong i.e., Hwa Fong and TRC Construction go up and down completely randomly.
Pair Corralation between Hwa Fong and TRC Construction
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to under-perform the TRC Construction. But the stock apears to be less risky and, when comparing its historical volatility, Hwa Fong Rubber is 7.79 times less risky than TRC Construction. The stock trades about -0.25 of its potential returns per unit of risk. The TRC Construction Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 168.00 in TRC Construction Public on September 3, 2024 and sell it today you would lose (20.00) from holding TRC Construction Public or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hwa Fong Rubber vs. TRC Construction Public
Performance |
| Timeline |
| Hwa Fong Rubber |
| TRC Construction Public |
Hwa Fong and TRC Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwa Fong and TRC Construction
The main advantage of trading using opposite Hwa Fong and TRC Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, TRC Construction 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 TRC Construction will offset losses from the drop in TRC Construction'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 |
| TRC Construction vs. Tata Steel Public | TRC Construction vs. TTCL Public | TRC Construction vs. Thaire Life Assurance | TRC Construction vs. Thaifoods Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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