Correlation Between Lian Hwa and Castles Technology
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Castles Technology 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 Castles Technology 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 Castles Technology Co, you can compare the effects of market volatilities on Lian Hwa and Castles Technology 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 Castles Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Castles Technology.
Diversification Opportunities for Lian Hwa and Castles Technology
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lian and Castles is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Castles Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castles Technology 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 Castles Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castles Technology has no effect on the direction of Lian Hwa i.e., Lian Hwa and Castles Technology go up and down completely randomly.
Pair Corralation between Lian Hwa and Castles Technology
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 0.75 times more return on investment than Castles Technology. However, Lian Hwa Foods is 1.34 times less risky than Castles Technology. It trades about 0.07 of its potential returns per unit of risk. Castles Technology Co is currently generating about -0.1 per unit of risk. If you would invest 11,200 in Lian Hwa Foods on September 26, 2024 and sell it today you would earn a total of 2,000 from holding Lian Hwa Foods or generate 17.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Lian Hwa Foods vs. Castles Technology Co
Performance |
Timeline |
Lian Hwa Foods |
Castles Technology |
Lian Hwa and Castles Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lian Hwa and Castles Technology
The main advantage of trading using opposite Lian Hwa and Castles Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Castles Technology 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 Castles Technology will offset losses from the drop in Castles Technology'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 |
Castles Technology vs. Gold Rain Enterprises | Castles Technology vs. Cipherlab Co | Castles Technology vs. Accton Technology Corp | Castles Technology vs. Wah Hong Industrial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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