Correlation Between Wei Chuan and Tradetool Auto
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Tradetool Auto 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 Tradetool Auto 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 Tradetool Auto Co, you can compare the effects of market volatilities on Wei Chuan and Tradetool Auto 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 Tradetool Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Tradetool Auto.
Diversification Opportunities for Wei Chuan and Tradetool Auto
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wei and Tradetool is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Tradetool Auto Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradetool Auto 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 Tradetool Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradetool Auto has no effect on the direction of Wei Chuan i.e., Wei Chuan and Tradetool Auto go up and down completely randomly.
Pair Corralation between Wei Chuan and Tradetool Auto
Assuming the 90 days trading horizon Wei Chuan Foods is expected to generate 0.14 times more return on investment than Tradetool Auto. However, Wei Chuan Foods is 7.15 times less risky than Tradetool Auto. It trades about -0.31 of its potential returns per unit of risk. Tradetool Auto Co is currently generating about -0.24 per unit of risk. If you would invest 1,795 in Wei Chuan Foods on October 14, 2024 and sell it today you would lose (40.00) from holding Wei Chuan Foods or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Tradetool Auto Co
Performance |
| Timeline |
| Wei Chuan Foods |
| Tradetool Auto |
Wei Chuan and Tradetool Auto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Tradetool Auto
The main advantage of trading using opposite Wei Chuan and Tradetool Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Tradetool Auto 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 Tradetool Auto will offset losses from the drop in Tradetool Auto'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 |
| Tradetool Auto vs. ALFORMER Industrial Co | Tradetool Auto vs. Wei Chuan Foods | Tradetool Auto vs. Tsang Yow Industrial | Tradetool Auto vs. Onano Industrial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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