Correlation Between Wei Chuan and WPG Holdings
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and WPG Holdings 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 WPG Holdings 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 WPG Holdings, you can compare the effects of market volatilities on Wei Chuan and WPG Holdings 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 WPG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and WPG Holdings.
Diversification Opportunities for Wei Chuan and WPG Holdings
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wei and WPG is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings 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 WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Wei Chuan i.e., Wei Chuan and WPG Holdings go up and down completely randomly.
Pair Corralation between Wei Chuan and WPG Holdings
Assuming the 90 days trading horizon Wei Chuan is expected to generate 1.68 times less return on investment than WPG Holdings. In addition to that, Wei Chuan is 3.04 times more volatile than WPG Holdings. It trades about 0.05 of its total potential returns per unit of risk. WPG Holdings is currently generating about 0.26 per unit of volatility. If you would invest 5,110 in WPG Holdings on September 14, 2024 and sell it today you would earn a total of 50.00 from holding WPG Holdings or generate 0.98% 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. WPG Holdings
Performance |
| Timeline |
| Wei Chuan Foods |
| WPG Holdings |
Wei Chuan and WPG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and WPG Holdings
The main advantage of trading using opposite Wei Chuan and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, WPG Holdings 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 WPG Holdings will offset losses from the drop in WPG Holdings' 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 |
| WPG Holdings vs. Galaxy Software Services | WPG Holdings vs. IBF Financial Holdings | WPG Holdings vs. Kinsus Interconnect Technology | WPG Holdings vs. Asmedia Technology |
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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