Correlation Between CP ALL and Hwa Fong

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

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

Diversification Opportunities for CP ALL and Hwa Fong

0.68

Correlation Coefficient

CP ALL  Hwa Fong

Poor diversification

The 3 months correlation between CPALL and Hwa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL 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 CP ALL 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 CP ALL 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 CP ALL i.e., CP ALL and Hwa Fong go up and down completely randomly.

Pair Corralation between CP ALL and Hwa Fong

Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the Hwa Fong. In addition to that, CP ALL is 1.78 times more volatile than Hwa Fong Rubber. It trades about -0.43 of its total potential returns per unit of risk. Hwa Fong Rubber is currently generating about -0.15 per unit of volatility. If you would invest  424.00  in Hwa Fong Rubber on September 24, 2024 and sell it today you would lose (14.00) from holding Hwa Fong Rubber or give up 3.3% of portfolio value over 90 days.

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

CP ALL Public  vs.  Hwa Fong Rubber

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL 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 January 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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CP ALL and Hwa Fong

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

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.