Correlation Between KGI Securities and Hwa Fong

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

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

Diversification Opportunities for KGI Securities and Hwa Fong

0.37

Correlation Coefficient

KGI Securities  Hwa Fong

Weak diversification

The 3 months correlation between KGI and Hwa is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding KGI Securities Public 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 KGI Securities 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 KGI Securities Public 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 KGI Securities i.e., KGI Securities and Hwa Fong go up and down completely randomly.

Pair Corralation between KGI Securities and Hwa Fong

Assuming the 90 days trading horizon KGI Securities Public is expected to generate 0.43 times more return on investment than Hwa Fong. However, KGI Securities Public is 2.34 times less risky than Hwa Fong. It trades about -0.33 of its potential returns per unit of risk. Hwa Fong Rubber is currently generating about -0.26 per unit of risk. If you would invest  438.00  in KGI Securities Public on September 1, 2024 and sell it today you would lose (18.00) from holding KGI Securities Public or give up 4.11% of portfolio value over 90 days.

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

KGI Securities Public  vs.  Hwa Fong Rubber

KGI Securities Public

Risk-Adjusted Performance

1 of 100

Weak

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

Hwa Fong Rubber

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hwa Fong Rubber are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Hwa Fong disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KGI Securities and Hwa Fong

The main advantage of trading using opposite KGI Securities and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGI Securities 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 KGI Securities Public 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.