Correlation Between SPCG Public and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both SPCG 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 SPCG 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 SPCG Public and Hwa Fong Rubber, you can compare the effects of market volatilities on SPCG 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 SPCG Public with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPCG Public and Hwa Fong.
Diversification Opportunities for SPCG Public and Hwa Fong
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SPCG and Hwa is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding SPCG 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 SPCG 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 SPCG 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 SPCG Public i.e., SPCG Public and Hwa Fong go up and down completely randomly.
Pair Corralation between SPCG Public and Hwa Fong
Assuming the 90 days trading horizon SPCG Public is expected to under-perform the Hwa Fong. But the stock apears to be less risky and, when comparing its historical volatility, SPCG Public is 56.64 times less risky than Hwa Fong. The stock trades about -0.02 of its potential returns per unit of risk. The Hwa Fong Rubber is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 431.00 in Hwa Fong Rubber on September 1, 2024 and sell it today you would lose (7.00) from holding Hwa Fong Rubber or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
SPCG Public vs. Hwa Fong Rubber
Performance |
| Timeline |
| SPCG Public |
| Hwa Fong Rubber |
SPCG Public and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPCG Public and Hwa Fong
The main advantage of trading using opposite SPCG Public and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPCG 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.| SPCG Public vs. BCPG Public | SPCG Public vs. TPI Polene Power | SPCG Public vs. BTS Group Holdings | SPCG Public vs. Energy Absolute 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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