Correlation Between IRPC Public and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both IRPC Public and Hwa Fong 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 IRPC Public and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IRPC Public and Hwa Fong Rubber, you can compare the effects of market volatilities on IRPC Public and Hwa Fong 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 IRPC Public with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRPC Public and Hwa Fong.
Diversification Opportunities for IRPC Public and Hwa Fong
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IRPC and Hwa is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding IRPC Public and Hwa Fong Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwa Fong Rubber and IRPC Public 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 IRPC Public are associated (or correlated) with Hwa Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwa Fong Rubber has no effect on the direction of IRPC Public i.e., IRPC Public and Hwa Fong go up and down completely randomly.
Pair Corralation between IRPC Public and Hwa Fong
Assuming the 90 days trading horizon IRPC Public is expected to generate 1.06 times less return on investment than Hwa Fong. In addition to that, IRPC Public is 1.0 times more volatile than Hwa Fong Rubber. It trades about 0.04 of its total potential returns per unit of risk. Hwa Fong Rubber is currently generating about 0.05 per unit of volatility. If you would invest 434.00 in Hwa Fong Rubber on September 1, 2024 and sell it today you would lose (10.00) from holding Hwa Fong Rubber or give up 2.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IRPC Public vs. Hwa Fong Rubber
Performance |
| Timeline |
| IRPC Public |
| Hwa Fong Rubber |
IRPC Public and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IRPC Public and Hwa Fong
The main advantage of trading using opposite IRPC Public and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRPC Public position performs unexpectedly, Hwa Fong 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 Hwa Fong will offset losses from the drop in Hwa Fong's long position.| IRPC Public vs. Sawang Export Public | IRPC Public vs. Quality Houses Hotel | IRPC Public vs. Grande Hospitality Real | IRPC Public vs. City Steel 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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