Correlation Between Wei Chuan and Chi Sheng
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Chi Sheng 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 Chi Sheng 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 Chi Sheng Chemical, you can compare the effects of market volatilities on Wei Chuan and Chi Sheng 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 Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Chi Sheng.
Diversification Opportunities for Wei Chuan and Chi Sheng
Very good diversification
The 3 months correlation between Wei and Chi is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical 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 Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Wei Chuan i.e., Wei Chuan and Chi Sheng go up and down completely randomly.
Pair Corralation between Wei Chuan and Chi Sheng
Assuming the 90 days trading horizon Wei Chuan Foods is expected to generate 0.43 times more return on investment than Chi Sheng. However, Wei Chuan Foods is 2.3 times less risky than Chi Sheng. It trades about 0.03 of its potential returns per unit of risk. Chi Sheng Chemical is currently generating about -0.02 per unit of risk. If you would invest 1,805 in Wei Chuan Foods on November 29, 2024 and sell it today you would earn a total of 5.00 from holding Wei Chuan Foods or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Chi Sheng Chemical
Performance |
| Timeline |
| Wei Chuan Foods |
| Chi Sheng Chemical |
Wei Chuan and Chi Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Chi Sheng
The main advantage of trading using opposite Wei Chuan and Chi Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Chi Sheng 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 Chi Sheng will offset losses from the drop in Chi Sheng'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 |
| Chi Sheng vs. GeneReach Biotechnology | Chi Sheng vs. Cameo Communications | Chi Sheng vs. Sunspring Metal Corp | Chi Sheng vs. Advanced Wireless Semiconductor |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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