Correlation Between WinMate Communication and Hwa Fong

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

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

Diversification Opportunities for WinMate Communication and Hwa Fong

-0.12

Correlation Coefficient

WinMate Communication  Hwa Fong

Good diversification

The 3 months correlation between WinMate and Hwa is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding WinMate Communication INC 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 WinMate Communication 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 WinMate Communication INC 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 WinMate Communication i.e., WinMate Communication and Hwa Fong go up and down completely randomly.

Pair Corralation between WinMate Communication and Hwa Fong

Assuming the 90 days trading horizon WinMate Communication is expected to generate 1.39 times less return on investment than Hwa Fong. In addition to that, WinMate Communication is 3.47 times more volatile than Hwa Fong Rubber. It trades about 0.03 of its total potential returns per unit of risk. Hwa Fong Rubber is currently generating about 0.16 per unit of volatility. If you would invest  1,800  in Hwa Fong Rubber on December 22, 2024 and sell it today you would earn a total of  115.00  from holding Hwa Fong Rubber or generate 6.39% return on investment over 90 days.

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

WinMate Communication INC  vs.  Hwa Fong Rubber

WinMate Communication INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WinMate Communication INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, WinMate Communication is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hwa Fong Rubber

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hwa Fong Rubber are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hwa Fong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with WinMate Communication and Hwa Fong

The main advantage of trading using opposite WinMate Communication and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WinMate Communication 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 WinMate Communication INC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.