Correlation Between Hwa Fong and Union Pioneer
Can any of the company-specific risk be diversified away by investing in both Hwa Fong and Union Pioneer 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 Union Pioneer 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 Union Pioneer Public, you can compare the effects of market volatilities on Hwa Fong and Union Pioneer 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 Union Pioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and Union Pioneer.
Diversification Opportunities for Hwa Fong and Union Pioneer
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hwa and Union is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Union Pioneer Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Pioneer 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 Union Pioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Pioneer Public has no effect on the direction of Hwa Fong i.e., Hwa Fong and Union Pioneer go up and down completely randomly.
Pair Corralation between Hwa Fong and Union Pioneer
Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 0.48 times more return on investment than Union Pioneer. However, Hwa Fong Rubber is 2.09 times less risky than Union Pioneer. It trades about -0.06 of its potential returns per unit of risk. Union Pioneer Public is currently generating about -0.05 per unit of risk. If you would invest 424.00 in Hwa Fong Rubber on September 15, 2024 and sell it today you would lose (6.00) from holding Hwa Fong Rubber or give up 1.42% 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. Union Pioneer Public
Performance |
| Timeline |
| Hwa Fong Rubber |
| Union Pioneer Public |
Hwa Fong and Union Pioneer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hwa Fong and Union Pioneer
The main advantage of trading using opposite Hwa Fong and Union Pioneer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, Union Pioneer 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 Union Pioneer will offset losses from the drop in Union Pioneer's long position.| Hwa Fong vs. AAPICO Hitech Public | Hwa Fong vs. Haad Thip Public | Hwa Fong vs. Italian Thai Development Public |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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