Correlation Between Wei Chuan and Maxigen Biotech
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Maxigen Biotech 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 Maxigen Biotech 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 Maxigen Biotech, you can compare the effects of market volatilities on Wei Chuan and Maxigen Biotech 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 Maxigen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Maxigen Biotech.
Diversification Opportunities for Wei Chuan and Maxigen Biotech
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wei and Maxigen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Maxigen Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxigen Biotech 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 Maxigen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxigen Biotech has no effect on the direction of Wei Chuan i.e., Wei Chuan and Maxigen Biotech go up and down completely randomly.
Pair Corralation between Wei Chuan and Maxigen Biotech
Assuming the 90 days trading horizon Wei Chuan Foods is expected to under-perform the Maxigen Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chuan Foods is 3.29 times less risky than Maxigen Biotech. The stock trades about -0.02 of its potential returns per unit of risk. The Maxigen Biotech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 4,245 in Maxigen Biotech on October 25, 2024 and sell it today you would earn a total of 785.00 from holding Maxigen Biotech or generate 18.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Maxigen Biotech
Performance |
| Timeline |
| Wei Chuan Foods |
| Maxigen Biotech |
Wei Chuan and Maxigen Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Maxigen Biotech
The main advantage of trading using opposite Wei Chuan and Maxigen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Maxigen Biotech 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 Maxigen Biotech will offset losses from the drop in Maxigen Biotech's long position.| Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Taisun Enterprise Co | Wei Chuan vs. AGV Products Corp | Wei Chuan vs. Great Wall Enterprise |
| Maxigen Biotech vs. Healthconn Corp | Maxigen Biotech vs. Cleanaway Co | Maxigen Biotech vs. PChome Online | Maxigen Biotech vs. Sunmax Biotechnology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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