Correlation Between Lam Soon and Hana Microelectronics
Can any of the company-specific risk be diversified away by investing in both Lam Soon and Hana Microelectronics 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 Lam Soon and Hana Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Soon Public and Hana Microelectronics Public, you can compare the effects of market volatilities on Lam Soon and Hana Microelectronics 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 Lam Soon with a short position of Hana Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Soon and Hana Microelectronics.
Diversification Opportunities for Lam Soon and Hana Microelectronics
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lam and Hana is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lam Soon Public and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and Lam Soon 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 Lam Soon Public are associated (or correlated) with Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of Lam Soon i.e., Lam Soon and Hana Microelectronics go up and down completely randomly.
Pair Corralation between Lam Soon and Hana Microelectronics
Assuming the 90 days trading horizon Lam Soon Public is expected to generate 0.18 times more return on investment than Hana Microelectronics. However, Lam Soon Public is 5.44 times less risky than Hana Microelectronics. It trades about 0.05 of its potential returns per unit of risk. Hana Microelectronics Public is currently generating about -0.05 per unit of risk. If you would invest 486.00 in Lam Soon Public on October 24, 2024 and sell it today you would earn a total of 2.00 from holding Lam Soon Public or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lam Soon Public vs. Hana Microelectronics Public
Performance |
| Timeline |
| Lam Soon Public |
| Hana Microelectronics |
Lam Soon and Hana Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Soon and Hana Microelectronics
The main advantage of trading using opposite Lam Soon and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Soon position performs unexpectedly, Hana Microelectronics 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 Hana Microelectronics will offset losses from the drop in Hana Microelectronics' long position.| Lam Soon vs. Haad Thip Public | Lam Soon vs. Hwa Fong Rubber | Lam Soon vs. GFPT Public | Lam Soon vs. KGI Securities 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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