Correlation Between Hwa Fong and Getabec Public

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

Diversification Opportunities for Hwa Fong and Getabec Public

0.1

Correlation Coefficient

Hwa Fong  Getabec Public

Average diversification

The 3 months correlation between Hwa and Getabec is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Getabec Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getabec Public 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 Getabec Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getabec Public has no effect on the direction of Hwa Fong i.e., Hwa Fong and Getabec Public go up and down completely randomly.

Pair Corralation between Hwa Fong and Getabec Public

Assuming the 90 days trading horizon Hwa Fong Rubber is expected to under-perform the Getabec Public. But the stock apears to be less risky and, when comparing its historical volatility, Hwa Fong Rubber is 1.77 times less risky than Getabec Public. The stock trades about -0.07 of its potential returns per unit of risk. The Getabec Public is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Getabec Public on December 5, 2024 and sell it today you would earn a total of  4.00  from holding Getabec Public or generate 5.63% return on investment over 90 days.

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

Hwa Fong Rubber  vs.  Getabec Public

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.

Getabec Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Getabec Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Getabec Public is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hwa Fong and Getabec Public

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

The idea behind Hwa Fong Rubber and Getabec Public 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.