Correlation Between Lian Hwa and K Laser
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and K Laser 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 Lian Hwa and K Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lian Hwa Foods and K Laser Technology, you can compare the effects of market volatilities on Lian Hwa and K Laser 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 Lian Hwa with a short position of K Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and K Laser.
Diversification Opportunities for Lian Hwa and K Laser
Pay attention - limited upside
The 3 months correlation between Lian and 2461 is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and K Laser Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Laser Technology and Lian Hwa 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 Lian Hwa Foods are associated (or correlated) with K Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Laser Technology has no effect on the direction of Lian Hwa i.e., Lian Hwa and K Laser go up and down completely randomly.
Pair Corralation between Lian Hwa and K Laser
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 1.26 times more return on investment than K Laser. However, Lian Hwa is 1.26 times more volatile than K Laser Technology. It trades about 0.08 of its potential returns per unit of risk. K Laser Technology is currently generating about -0.11 per unit of risk. If you would invest 10,750 in Lian Hwa Foods on September 22, 2024 and sell it today you would earn a total of 2,000 from holding Lian Hwa Foods or generate 18.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.22% |
Values | Daily Returns |
Lian Hwa Foods vs. K Laser Technology
Performance |
Timeline |
Lian Hwa Foods |
K Laser Technology |
Lian Hwa and K Laser Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lian Hwa and K Laser
The main advantage of trading using opposite Lian Hwa and K Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, K Laser 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 K Laser will offset losses from the drop in K Laser's long position.Lian Hwa vs. AGV Products Corp | Lian Hwa vs. Taisun Enterprise Co | Lian Hwa vs. De Licacy Industrial | Lian Hwa vs. Wisher Industrial Co |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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