Correlation Between Wei Chuan and Louisa Professional
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Louisa Professional 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 Louisa Professional 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 Louisa Professional Coffee, you can compare the effects of market volatilities on Wei Chuan and Louisa Professional 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 Louisa Professional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Louisa Professional.
Diversification Opportunities for Wei Chuan and Louisa Professional
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wei and Louisa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Louisa Professional Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Louisa Professional 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 Louisa Professional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Louisa Professional has no effect on the direction of Wei Chuan i.e., Wei Chuan and Louisa Professional go up and down completely randomly.
Pair Corralation between Wei Chuan and Louisa Professional
Assuming the 90 days trading horizon Wei Chuan Foods is expected to generate 0.53 times more return on investment than Louisa Professional. However, Wei Chuan Foods is 1.9 times less risky than Louisa Professional. It trades about -0.06 of its potential returns per unit of risk. Louisa Professional Coffee is currently generating about -0.15 per unit of risk. If you would invest 1,925 in Wei Chuan Foods on September 1, 2024 and sell it today you would lose (95.00) from holding Wei Chuan Foods or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Louisa Professional Coffee
Performance |
| Timeline |
| Wei Chuan Foods |
| Louisa Professional |
Wei Chuan and Louisa Professional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Louisa Professional
The main advantage of trading using opposite Wei Chuan and Louisa Professional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Louisa Professional 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 Louisa Professional will offset losses from the drop in Louisa Professional's long position.| Wei Chuan vs. De Licacy Industrial | Wei Chuan vs. Wisher Industrial Co | Wei Chuan vs. Tainan Enterprises Co |
| Louisa Professional vs. Gourmet Master Co | Louisa Professional vs. Wowprime Corp | Louisa Professional vs. Hi Lai Foods Co | Louisa Professional vs. An Shin Food Services |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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