Correlation Between FineMat Applied and Hwa Fong

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

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

Diversification Opportunities for FineMat Applied and Hwa Fong

0.52

Correlation Coefficient

FineMat Applied  Hwa Fong

Very weak diversification

The 3 months correlation between FineMat and Hwa is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding FineMat Applied Materials 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 FineMat Applied 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 FineMat Applied Materials 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 FineMat Applied i.e., FineMat Applied and Hwa Fong go up and down completely randomly.

Pair Corralation between FineMat Applied and Hwa Fong

Assuming the 90 days trading horizon FineMat Applied Materials is expected to under-perform the Hwa Fong. In addition to that, FineMat Applied is 2.43 times more volatile than Hwa Fong Rubber. It trades about -0.2 of its total potential returns per unit of risk. Hwa Fong Rubber is currently generating about -0.04 per unit of volatility. If you would invest  1,835  in Hwa Fong Rubber on October 23, 2024 and sell it today you would lose (35.00) from holding Hwa Fong Rubber or give up 1.91% of portfolio value over 90 days.

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

FineMat Applied Materials  vs.  Hwa Fong Rubber

FineMat Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FineMat Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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.

Pair Trading with FineMat Applied and Hwa Fong

The main advantage of trading using opposite FineMat Applied and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FineMat Applied 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 FineMat Applied Materials 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..