Correlation Between TRC Construction and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both TRC Construction 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 TRC Construction and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRC Construction Public and Hwa Fong Rubber, you can compare the effects of market volatilities on TRC Construction 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 TRC Construction with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRC Construction and Hwa Fong.
Diversification Opportunities for TRC Construction and Hwa Fong
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TRC and Hwa is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TRC Construction 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 TRC Construction 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 TRC Construction 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 TRC Construction i.e., TRC Construction and Hwa Fong go up and down completely randomly.
Pair Corralation between TRC Construction and Hwa Fong
Assuming the 90 days trading horizon TRC Construction is expected to generate 46.98 times less return on investment than Hwa Fong. But when comparing it to its historical volatility, TRC Construction Public is 16.01 times less risky than Hwa Fong. It trades about 0.04 of its potential returns per unit of risk. Hwa Fong Rubber is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Hwa Fong Rubber on September 3, 2024 and sell it today you would earn a total of 424.00 from holding Hwa Fong Rubber or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRC Construction Public vs. Hwa Fong Rubber
Performance |
| Timeline |
| TRC Construction Public |
| Hwa Fong Rubber |
TRC Construction and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRC Construction and Hwa Fong
The main advantage of trading using opposite TRC Construction and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRC Construction 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.| TRC Construction vs. Tata Steel Public | TRC Construction vs. TTCL Public | TRC Construction vs. Thaire Life Assurance | TRC Construction vs. Thaifoods Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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