Correlation Between Wave Electronics and Haitai Confectionery
Can any of the company-specific risk be diversified away by investing in both Wave Electronics and Haitai Confectionery 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 Wave Electronics and Haitai Confectionery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Electronics Co and Haitai Confectionery Foods, you can compare the effects of market volatilities on Wave Electronics and Haitai Confectionery 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 Wave Electronics with a short position of Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Electronics and Haitai Confectionery.
Diversification Opportunities for Wave Electronics and Haitai Confectionery
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wave and Haitai is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wave Electronics Co and Haitai Confectionery Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haitai Confectionery and Wave Electronics 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 Wave Electronics Co are associated (or correlated) with Haitai Confectionery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haitai Confectionery has no effect on the direction of Wave Electronics i.e., Wave Electronics and Haitai Confectionery go up and down completely randomly.
Pair Corralation between Wave Electronics and Haitai Confectionery
Assuming the 90 days trading horizon Wave Electronics Co is expected to under-perform the Haitai Confectionery. In addition to that, Wave Electronics is 1.16 times more volatile than Haitai Confectionery Foods. It trades about -0.01 of its total potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.0 per unit of volatility. If you would invest 650,533 in Haitai Confectionery Foods on October 29, 2024 and sell it today you would lose (71,533) from holding Haitai Confectionery Foods or give up 11.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wave Electronics Co vs. Haitai Confectionery Foods
Performance |
| Timeline |
| Wave Electronics |
| Haitai Confectionery |
Wave Electronics and Haitai Confectionery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wave Electronics and Haitai Confectionery
The main advantage of trading using opposite Wave Electronics and Haitai Confectionery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Electronics position performs unexpectedly, Haitai Confectionery 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 Haitai Confectionery will offset losses from the drop in Haitai Confectionery's long position.| Wave Electronics vs. Samsung Electronics Co | Wave Electronics vs. Samsung Electronics Co | Wave Electronics vs. SK Hynix | Wave Electronics vs. HMM Co |
| Haitai Confectionery vs. KT Submarine Telecom | Haitai Confectionery vs. Nable Communications | Haitai Confectionery vs. SK Telecom Co | Haitai Confectionery vs. Dongil Metal Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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