Correlation Between Wei Chuan and Chia Hsin
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Chia Hsin 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 Wei Chuan and Chia Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wei Chuan Foods and Chia Hsin Cement, you can compare the effects of market volatilities on Wei Chuan and Chia Hsin 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 Wei Chuan with a short position of Chia Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Chia Hsin.
Diversification Opportunities for Wei Chuan and Chia Hsin
Poor diversification
The 3 months correlation between Wei and Chia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Chia Hsin Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Hsin Cement and Wei Chuan 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 Wei Chuan Foods are associated (or correlated) with Chia Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Hsin Cement has no effect on the direction of Wei Chuan i.e., Wei Chuan and Chia Hsin go up and down completely randomly.
Pair Corralation between Wei Chuan and Chia Hsin
Assuming the 90 days trading horizon Wei Chuan Foods is expected to under-perform the Chia Hsin. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chuan Foods is 1.73 times less risky than Chia Hsin. The stock trades about -0.02 of its potential returns per unit of risk. The Chia Hsin Cement is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,755 in Chia Hsin Cement on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Chia Hsin Cement or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Chia Hsin Cement
Performance |
| Timeline |
| Wei Chuan Foods |
| Chia Hsin Cement |
Wei Chuan and Chia Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Chia Hsin
The main advantage of trading using opposite Wei Chuan and Chia Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Chia Hsin 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 Chia Hsin will offset losses from the drop in Chia Hsin's long position.| Wei Chuan vs. Standard Foods Corp | Wei Chuan vs. TTET Union Corp | Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Charoen Pokphand Enterprise |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |