Correlation Between Wei Chuan and Kenmec Mechanical
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Kenmec Mechanical 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 Kenmec Mechanical 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 Kenmec Mechanical Engineering, you can compare the effects of market volatilities on Wei Chuan and Kenmec Mechanical 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 Kenmec Mechanical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Kenmec Mechanical.
Diversification Opportunities for Wei Chuan and Kenmec Mechanical
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wei and Kenmec is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Kenmec Mechanical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenmec Mechanical 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 Kenmec Mechanical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenmec Mechanical has no effect on the direction of Wei Chuan i.e., Wei Chuan and Kenmec Mechanical go up and down completely randomly.
Pair Corralation between Wei Chuan and Kenmec Mechanical
Assuming the 90 days trading horizon Wei Chuan Foods is expected to generate 0.24 times more return on investment than Kenmec Mechanical. However, Wei Chuan Foods is 4.16 times less risky than Kenmec Mechanical. It trades about -0.06 of its potential returns per unit of risk. Kenmec Mechanical Engineering is currently generating about -0.07 per unit of risk. If you would invest 1,820 in Wei Chuan Foods on September 12, 2024 and sell it today you would lose (15.00) from holding Wei Chuan Foods or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Kenmec Mechanical Engineering
Performance |
| Timeline |
| Wei Chuan Foods |
| Kenmec Mechanical |
Wei Chuan and Kenmec Mechanical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Kenmec Mechanical
The main advantage of trading using opposite Wei Chuan and Kenmec Mechanical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Kenmec Mechanical 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 Kenmec Mechanical will offset losses from the drop in Kenmec Mechanical'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 |
| Kenmec Mechanical vs. U Tech Media Corp | Kenmec Mechanical vs. Wei Chuan Foods | Kenmec Mechanical vs. Cowealth Medical Holding | Kenmec Mechanical vs. Gamania Digital Entertainment |
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 CEOs Directory module to screen CEOs from public companies around the world.
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