Correlation Between Hwa Fong and MFC Asset

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

Diversification Opportunities for Hwa Fong and MFC Asset

0.32

Correlation Coefficient

Hwa Fong  MFC Asset

Weak diversification

The 3 months correlation between Hwa and MFC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and MFC Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Asset Management 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 MFC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Asset Management has no effect on the direction of Hwa Fong i.e., Hwa Fong and MFC Asset go up and down completely randomly.

Pair Corralation between Hwa Fong and MFC Asset

Assuming the 90 days trading horizon Hwa Fong is expected to generate 1.07 times less return on investment than MFC Asset. In addition to that, Hwa Fong is 1.0 times more volatile than MFC Asset Management. It trades about 0.04 of its total potential returns per unit of risk. MFC Asset Management is currently generating about 0.04 per unit of volatility. If you would invest  2,118  in MFC Asset Management on October 11, 2024 and sell it today you would earn a total of  807.00  from holding MFC Asset Management or generate 38.1% return on investment over 90 days.

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

Hwa Fong Rubber  vs.  MFC Asset Management

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. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

MFC Asset Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Asset Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, MFC Asset may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hwa Fong and MFC Asset

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

The idea behind Hwa Fong Rubber and MFC Asset Management 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.