Correlation Between Hwa Fong and Bualuang Office

Can any of the company-specific risk be diversified away by investing in both Hwa Fong and Bualuang Office 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 Bualuang Office 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 Bualuang Office Leasehold, you can compare the effects of market volatilities on Hwa Fong and Bualuang Office 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 Bualuang Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwa Fong and Bualuang Office.

Diversification Opportunities for Hwa Fong and Bualuang Office

0.2

Correlation Coefficient

Hwa Fong  Bualuang Office

Modest diversification

The 3 months correlation between Hwa and Bualuang is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Bualuang Office Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bualuang Office Leasehold 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 Bualuang Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bualuang Office Leasehold has no effect on the direction of Hwa Fong i.e., Hwa Fong and Bualuang Office go up and down completely randomly.

Pair Corralation between Hwa Fong and Bualuang Office

Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 0.07 times more return on investment than Bualuang Office. However, Hwa Fong Rubber is 13.98 times less risky than Bualuang Office. It trades about -0.1 of its potential returns per unit of risk. Bualuang Office Leasehold is currently generating about -0.13 per unit of risk. If you would invest  416.00  in Hwa Fong Rubber on December 23, 2024 and sell it today you would lose (24.00) from holding Hwa Fong Rubber or give up 5.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Hwa Fong Rubber  vs.  Bualuang Office Leasehold

Hwa Fong Rubber

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hwa Fong Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Hwa Fong is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bualuang Office Leasehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bualuang Office Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hwa Fong and Bualuang Office

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

The idea behind Hwa Fong Rubber and Bualuang Office Leasehold 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.