Correlation Between Hwa Fong and MCS Steel

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

Diversification Opportunities for Hwa Fong and MCS Steel

0.22

Correlation Coefficient

Hwa Fong  MCS Steel

Modest diversification

The 3 months correlation between Hwa and MCS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hwa Fong Rubber and MCS Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCS Steel 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 MCS Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCS Steel Public has no effect on the direction of Hwa Fong i.e., Hwa Fong and MCS Steel go up and down completely randomly.

Pair Corralation between Hwa Fong and MCS Steel

Assuming the 90 days trading horizon Hwa Fong Rubber is expected to generate 0.64 times more return on investment than MCS Steel. However, Hwa Fong Rubber is 1.57 times less risky than MCS Steel. It trades about 0.25 of its potential returns per unit of risk. MCS Steel Public is currently generating about 0.1 per unit of risk. If you would invest  360.00  in Hwa Fong Rubber on April 24, 2025 and sell it today you would earn a total of  54.00  from holding Hwa Fong Rubber or generate 15.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Hwa Fong Rubber  vs.  MCS Steel Public

Hwa Fong Rubber

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hwa Fong Rubber are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Hwa Fong disclosed solid returns over the last few months and may actually be approaching a breakup point.

MCS Steel Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCS Steel Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, MCS Steel may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Hwa Fong and MCS Steel

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

The idea behind Hwa Fong Rubber and MCS Steel 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.