Correlation Between Wei Chuan and YoungQin International
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and YoungQin International 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 YoungQin International 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 YoungQin International Co, you can compare the effects of market volatilities on Wei Chuan and YoungQin International 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 YoungQin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and YoungQin International.
Diversification Opportunities for Wei Chuan and YoungQin International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wei and YoungQin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and YoungQin International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YoungQin International 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 YoungQin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YoungQin International has no effect on the direction of Wei Chuan i.e., Wei Chuan and YoungQin International go up and down completely randomly.
Pair Corralation between Wei Chuan and YoungQin International
Assuming the 90 days trading horizon Wei Chuan is expected to generate 1.87 times less return on investment than YoungQin International. But when comparing it to its historical volatility, Wei Chuan Foods is 1.92 times less risky than YoungQin International. It trades about 0.15 of its potential returns per unit of risk. YoungQin International Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 9,700 in YoungQin International Co on September 3, 2024 and sell it today you would earn a total of 300.00 from holding YoungQin International Co or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. YoungQin International Co
Performance |
| Timeline |
| Wei Chuan Foods |
| YoungQin International |
Wei Chuan and YoungQin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and YoungQin International
The main advantage of trading using opposite Wei Chuan and YoungQin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, YoungQin International 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 YoungQin International will offset losses from the drop in YoungQin International'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 |
| YoungQin International vs. Est Global Apparel | YoungQin International vs. Easywell Biomedicals | YoungQin International vs. Wei Chuan Foods | YoungQin International vs. Energenesis Biomedical 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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