Correlation Between Haitai Confectionery and Withuspharmaceutical
Can any of the company-specific risk be diversified away by investing in both Haitai Confectionery and Withuspharmaceutical 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 Haitai Confectionery and Withuspharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haitai Confectionery Foods and Withuspharmaceutical CoLtd, you can compare the effects of market volatilities on Haitai Confectionery and Withuspharmaceutical 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 Haitai Confectionery with a short position of Withuspharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haitai Confectionery and Withuspharmaceutical.
Diversification Opportunities for Haitai Confectionery and Withuspharmaceutical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Haitai and Withuspharmaceutical is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods and Withuspharmaceutical CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Withuspharmaceutical and Haitai Confectionery 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 Haitai Confectionery Foods are associated (or correlated) with Withuspharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Withuspharmaceutical has no effect on the direction of Haitai Confectionery i.e., Haitai Confectionery and Withuspharmaceutical go up and down completely randomly.
Pair Corralation between Haitai Confectionery and Withuspharmaceutical
Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to generate 0.7 times more return on investment than Withuspharmaceutical. However, Haitai Confectionery Foods is 1.44 times less risky than Withuspharmaceutical. It trades about 0.0 of its potential returns per unit of risk. Withuspharmaceutical CoLtd is currently generating about -0.1 per unit of risk. If you would invest 581,000 in Haitai Confectionery Foods on September 12, 2024 and sell it today you would lose (6,000) from holding Haitai Confectionery Foods or give up 1.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haitai Confectionery Foods vs. Withuspharmaceutical CoLtd
Performance |
| Timeline |
| Haitai Confectionery |
| Withuspharmaceutical |
Haitai Confectionery and Withuspharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haitai Confectionery and Withuspharmaceutical
The main advantage of trading using opposite Haitai Confectionery and Withuspharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery position performs unexpectedly, Withuspharmaceutical 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 Withuspharmaceutical will offset losses from the drop in Withuspharmaceutical's long position.| Haitai Confectionery vs. Samsung Electronics Co | Haitai Confectionery vs. Samsung Electronics Co | Haitai Confectionery vs. SK Hynix | Haitai Confectionery vs. POSCO Holdings |
| Withuspharmaceutical vs. Dongbu Insurance Co | Withuspharmaceutical vs. Samsung Life Insurance | Withuspharmaceutical vs. Namhwa Industrial Co | Withuspharmaceutical vs. Insung Information 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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