Correlation Between Lalin Property and Hwa Fong

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

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

Diversification Opportunities for Lalin Property and Hwa Fong

0.7

Correlation Coefficient

Lalin Property  Hwa Fong

Poor diversification

The 3 months correlation between Lalin and Hwa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lalin Property 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 Lalin Property 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 Lalin Property 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 Lalin Property i.e., Lalin Property and Hwa Fong go up and down completely randomly.

Pair Corralation between Lalin Property and Hwa Fong

Assuming the 90 days trading horizon Lalin Property Public is expected to under-perform the Hwa Fong. But the stock apears to be less risky and, when comparing its historical volatility, Lalin Property Public is 61.95 times less risky than Hwa Fong. The stock trades about -0.1 of its potential returns per unit of risk. The Hwa Fong Rubber is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  566.00  in Hwa Fong Rubber on October 21, 2024 and sell it today you would lose (140.00) from holding Hwa Fong Rubber or give up 24.73% of portfolio value over 90 days.

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

Lalin Property Public  vs.  Hwa Fong Rubber

Lalin Property Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lalin Property Public 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 fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company 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. 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.

Pair Trading with Lalin Property and Hwa Fong

The main advantage of trading using opposite Lalin Property and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lalin Property 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 Lalin Property 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.