Correlation Between Hwa Fong and Jay Mart

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

Diversification Opportunities for Hwa Fong and Jay Mart

0.82

Correlation Coefficient

Hwa Fong  Jay Mart

Very poor diversification

The 3 months correlation between Hwa and Jay is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and Jay Mart Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jay Mart Public 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 Jay Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jay Mart Public has no effect on the direction of Hwa Fong i.e., Hwa Fong and Jay Mart go up and down completely randomly.

Pair Corralation between Hwa Fong and Jay Mart

Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 0.44 times more return on investment than Jay Mart. However, Hwa Fong Rubber is 2.29 times less risky than Jay Mart. It trades about -0.15 of its potential returns per unit of risk. Jay Mart Public is currently generating about -0.12 per unit of risk. If you would invest  456.00  in Hwa Fong Rubber on September 14, 2024 and sell it today you would lose (42.00) from holding Hwa Fong Rubber or give up 9.21% of portfolio value over 90 days.

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

Hwa Fong Rubber  vs.  Jay Mart Public

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.

Jay Mart Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jay Mart 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.

Pair Trading with Hwa Fong and Jay Mart

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

The idea behind Hwa Fong Rubber and Jay Mart Public 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.