Correlation Between Prince Housing and Hwa Fong

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Can any of the company-specific risk be diversified away by investing in both Prince Housing 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 Prince Housing and Hwa Fong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prince Housing Development and Hwa Fong Rubber, you can compare the effects of market volatilities on Prince Housing 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 Prince Housing with a short position of Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prince Housing and Hwa Fong.

Diversification Opportunities for Prince Housing and Hwa Fong

PrinceHwaDiversified AwayPrinceHwaDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Prince and Hwa is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Prince Housing Development 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 Prince Housing 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 Prince Housing Development 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 Prince Housing i.e., Prince Housing and Hwa Fong go up and down completely randomly.

Pair Corralation between Prince Housing and Hwa Fong

Assuming the 90 days trading horizon Prince Housing Development is expected to under-perform the Hwa Fong. In addition to that, Prince Housing is 1.32 times more volatile than Hwa Fong Rubber. It trades about -0.04 of its total potential returns per unit of risk. Hwa Fong Rubber is currently generating about -0.03 per unit of volatility. If you would invest  1,835  in Hwa Fong Rubber on October 31, 2024 and sell it today you would lose (25.00) from holding Hwa Fong Rubber or give up 1.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Prince Housing Development  vs.  Hwa Fong Rubber

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -6-4-2024
JavaScript chart by amCharts 3.21.152511 2109
       Timeline  
Prince Housing Devel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Prince Housing Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Prince Housing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan9.69.81010.210.410.610.811
Hwa Fong Rubber 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan17.417.617.81818.218.418.618.819

Prince Housing and Hwa Fong Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.58-1.18-0.78-0.38-0.02640.290.691.091.49 0.10.20.30.40.50.6
JavaScript chart by amCharts 3.21.152511 2109
       Returns  

Pair Trading with Prince Housing and Hwa Fong

The main advantage of trading using opposite Prince Housing and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prince Housing 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.
The idea behind Prince Housing Development and Hwa Fong Rubber 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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