Correlation Between Hwa Fong and Pili International

Can any of the company-specific risk be diversified away by investing in both Hwa Fong and Pili International 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 Hwa Fong and Pili International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hwa Fong Rubber and Pili International Multimedia, you can compare the effects of market volatilities on Hwa Fong and Pili International 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 Hwa Fong with a short position of Pili International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and Pili International.

Diversification Opportunities for Hwa Fong and Pili International

0.75

Correlation Coefficient

Hwa Fong  Pili International

Poor diversification

The 3 months correlation between Hwa and Pili is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Pili International Multimedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pili International and Hwa Fong 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 Hwa Fong Rubber are associated (or correlated) with Pili International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pili International has no effect on the direction of Hwa Fong i.e., Hwa Fong and Pili International go up and down completely randomly.

Pair Corralation between Hwa Fong and Pili International

Assuming the 90 days trading horizon Hwa Fong Rubber is expected to under-perform the Pili International. But the stock apears to be less risky and, when comparing its historical volatility, Hwa Fong Rubber is 2.16 times less risky than Pili International. The stock trades about -0.07 of its potential returns per unit of risk. The Pili International Multimedia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,330  in Pili International Multimedia on October 8, 2024 and sell it today you would earn a total of  65.00  from holding Pili International Multimedia or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hwa Fong Rubber  vs.  Pili International Multimedia

Hwa Fong Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hwa Fong Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hwa Fong is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pili International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pili International Multimedia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Hwa Fong and Pili International

The main advantage of trading using opposite Hwa Fong and Pili International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hwa Fong position performs unexpectedly, Pili International 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 Pili International will offset losses from the drop in Pili International's long position.

The idea behind Hwa Fong Rubber and Pili International Multimedia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.