Correlation Between Hwa Fong and Globlex Holding

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

Diversification Opportunities for Hwa Fong and Globlex Holding

0.91

Correlation Coefficient

Hwa Fong  Globlex Holding

Almost no diversification

The 3 months correlation between Hwa and Globlex is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Globlex Holding Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globlex Holding Mana 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 Globlex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globlex Holding Mana has no effect on the direction of Hwa Fong i.e., Hwa Fong and Globlex Holding go up and down completely randomly.

Pair Corralation between Hwa Fong and Globlex Holding

Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 0.67 times more return on investment than Globlex Holding. However, Hwa Fong Rubber is 1.5 times less risky than Globlex Holding. It trades about -0.13 of its potential returns per unit of risk. Globlex Holding Management is currently generating about -0.09 per unit of risk. If you would invest  456.00  in Hwa Fong Rubber on September 16, 2024 and sell it today you would lose (38.00) from holding Hwa Fong Rubber or give up 8.33% of portfolio value over 90 days.

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

Hwa Fong Rubber  vs.  Globlex Holding 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.

Globlex Holding Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globlex Holding Management 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.

Pair Trading with Hwa Fong and Globlex Holding

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

The idea behind Hwa Fong Rubber and Globlex Holding 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.