Correlation Between Wei Chuan and De Licacy
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and De Licacy 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 De Licacy 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 De Licacy Industrial, you can compare the effects of market volatilities on Wei Chuan and De Licacy 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 De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and De Licacy.
Diversification Opportunities for Wei Chuan and De Licacy
Very good diversification
The 3 months correlation between Wei and 1464 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial 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 De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of Wei Chuan i.e., Wei Chuan and De Licacy go up and down completely randomly.
Pair Corralation between Wei Chuan and De Licacy
Assuming the 90 days trading horizon Wei Chuan Foods is expected to under-perform the De Licacy. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chuan Foods is 2.06 times less risky than De Licacy. The stock trades about -0.01 of its potential returns per unit of risk. The De Licacy Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,405 in De Licacy Industrial on September 3, 2024 and sell it today you would earn a total of 150.00 from holding De Licacy Industrial or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. De Licacy Industrial
Performance |
| Timeline |
| Wei Chuan Foods |
| De Licacy Industrial |
Wei Chuan and De Licacy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and De Licacy
The main advantage of trading using opposite Wei Chuan and De Licacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, De Licacy 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 De Licacy will offset losses from the drop in De Licacy'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 |
| De Licacy vs. Tainan Spinning Co | De Licacy vs. Chia Her Industrial | De Licacy vs. WiseChip Semiconductor | De Licacy vs. Novatek Microelectronics Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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