Correlation Between Lian Hwa and Jentech Precision
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Jentech Precision 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 Lian Hwa and Jentech Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lian Hwa Foods and Jentech Precision Industrial, you can compare the effects of market volatilities on Lian Hwa and Jentech Precision 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 Lian Hwa with a short position of Jentech Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Jentech Precision.
Diversification Opportunities for Lian Hwa and Jentech Precision
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lian and Jentech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Jentech Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jentech Precision and Lian Hwa 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 Lian Hwa Foods are associated (or correlated) with Jentech Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jentech Precision has no effect on the direction of Lian Hwa i.e., Lian Hwa and Jentech Precision go up and down completely randomly.
Pair Corralation between Lian Hwa and Jentech Precision
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 0.63 times more return on investment than Jentech Precision. However, Lian Hwa Foods is 1.59 times less risky than Jentech Precision. It trades about 0.25 of its potential returns per unit of risk. Jentech Precision Industrial is currently generating about -0.02 per unit of risk. If you would invest 11,550 in Lian Hwa Foods on September 23, 2024 and sell it today you would earn a total of 1,200 from holding Lian Hwa Foods or generate 10.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lian Hwa Foods vs. Jentech Precision Industrial
Performance |
Timeline |
Lian Hwa Foods |
Jentech Precision |
Lian Hwa and Jentech Precision Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lian Hwa and Jentech Precision
The main advantage of trading using opposite Lian Hwa and Jentech Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Jentech Precision 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 Jentech Precision will offset losses from the drop in Jentech Precision's long position.Lian Hwa vs. Taisun Enterprise Co | Lian Hwa vs. De Licacy Industrial | Lian Hwa vs. Wisher Industrial Co | Lian Hwa vs. Tainan Enterprises Co |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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