Correlation Between Zinwell and Lung Hwa
Can any of the company-specific risk be diversified away by investing in both Zinwell and Lung Hwa 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 Zinwell and Lung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zinwell and Lung Hwa Electronics, you can compare the effects of market volatilities on Zinwell and Lung Hwa 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 Zinwell with a short position of Lung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zinwell and Lung Hwa.
Diversification Opportunities for Zinwell and Lung Hwa
Very poor diversification
The 3 months correlation between Zinwell and Lung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Zinwell and Lung Hwa Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lung Hwa Electronics and Zinwell 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 Zinwell are associated (or correlated) with Lung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lung Hwa Electronics has no effect on the direction of Zinwell i.e., Zinwell and Lung Hwa go up and down completely randomly.
Pair Corralation between Zinwell and Lung Hwa
Assuming the 90 days trading horizon Zinwell is expected to generate 0.66 times more return on investment than Lung Hwa. However, Zinwell is 1.53 times less risky than Lung Hwa. It trades about -0.33 of its potential returns per unit of risk. Lung Hwa Electronics is currently generating about -0.22 per unit of risk. If you would invest 1,665 in Zinwell on October 9, 2024 and sell it today you would lose (200.00) from holding Zinwell or give up 12.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Zinwell vs. Lung Hwa Electronics
Performance |
Timeline |
Zinwell |
Lung Hwa Electronics |
Zinwell and Lung Hwa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zinwell and Lung Hwa
The main advantage of trading using opposite Zinwell and Lung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zinwell position performs unexpectedly, Lung Hwa 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 Lung Hwa will offset losses from the drop in Lung Hwa's long position.Zinwell vs. Clevo Co | Zinwell vs. D Link Corp | Zinwell vs. Cheng Uei Precision | Zinwell vs. Senao International 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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