Correlation Between Wei Chuan and ZongTai Real
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and ZongTai Real 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 ZongTai Real 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 ZongTai Real Estate, you can compare the effects of market volatilities on Wei Chuan and ZongTai Real 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 ZongTai Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and ZongTai Real.
Diversification Opportunities for Wei Chuan and ZongTai Real
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wei and ZongTai is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and ZongTai Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZongTai Real Estate 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 ZongTai Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZongTai Real Estate has no effect on the direction of Wei Chuan i.e., Wei Chuan and ZongTai Real go up and down completely randomly.
Pair Corralation between Wei Chuan and ZongTai Real
Assuming the 90 days trading horizon Wei Chuan Foods is expected to under-perform the ZongTai Real. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chuan Foods is 3.12 times less risky than ZongTai Real. The stock trades about -0.03 of its potential returns per unit of risk. The ZongTai Real Estate is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,605 in ZongTai Real Estate on September 3, 2024 and sell it today you would lose (170.00) from holding ZongTai Real Estate or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. ZongTai Real Estate
Performance |
| Timeline |
| Wei Chuan Foods |
| ZongTai Real Estate |
Wei Chuan and ZongTai Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and ZongTai Real
The main advantage of trading using opposite Wei Chuan and ZongTai Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, ZongTai Real 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 ZongTai Real will offset losses from the drop in ZongTai Real'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 |
| ZongTai Real vs. Lian Hwa Foods | ZongTai Real vs. Ever Clear Environmental Eng | ZongTai Real vs. Standard Foods Corp | ZongTai Real vs. Mechema Chemicals Int |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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