Correlation Between SCG PACKAGING and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both SCG PACKAGING 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 SCG PACKAGING and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCG PACKAGING PCL NVDR and Hwa Fong Rubber, you can compare the effects of market volatilities on SCG PACKAGING 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 SCG PACKAGING with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG PACKAGING and Hwa Fong.
Diversification Opportunities for SCG PACKAGING and Hwa Fong
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between SCG and Hwa is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SCG PACKAGING PCL NVDR 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 SCG PACKAGING 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 SCG PACKAGING PCL NVDR 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 SCG PACKAGING i.e., SCG PACKAGING and Hwa Fong go up and down completely randomly.
Pair Corralation between SCG PACKAGING and Hwa Fong
Assuming the 90 days trading horizon SCG PACKAGING PCL NVDR is expected to under-perform the Hwa Fong. In addition to that, SCG PACKAGING is 6.57 times more volatile than Hwa Fong Rubber. It trades about -0.25 of its total potential returns per unit of risk. Hwa Fong Rubber is currently generating about -0.32 per unit of volatility. If you would invest 456.00 in Hwa Fong Rubber on August 29, 2024 and sell it today you would lose (40.00) from holding Hwa Fong Rubber or give up 8.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCG PACKAGING PCL NVDR vs. Hwa Fong Rubber
Performance |
| Timeline |
| SCG PACKAGING PCL |
| Hwa Fong Rubber |
SCG PACKAGING and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCG PACKAGING and Hwa Fong
The main advantage of trading using opposite SCG PACKAGING and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCG PACKAGING 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.| SCG PACKAGING vs. Quality Houses Hotel | SCG PACKAGING vs. Quality Houses Property | SCG PACKAGING vs. CK Power Public | SCG PACKAGING vs. Thai Metal Drum |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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