Correlation Between Wei Chuan and TUL
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and TUL 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 TUL 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 TUL Corporation, you can compare the effects of market volatilities on Wei Chuan and TUL 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 TUL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and TUL.
Diversification Opportunities for Wei Chuan and TUL
Good diversification
The 3 months correlation between Wei and TUL is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and TUL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TUL Corporation 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 TUL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TUL Corporation has no effect on the direction of Wei Chuan i.e., Wei Chuan and TUL go up and down completely randomly.
Pair Corralation between Wei Chuan and TUL
Assuming the 90 days trading horizon Wei Chuan Foods is expected to generate 0.22 times more return on investment than TUL. However, Wei Chuan Foods is 4.55 times less risky than TUL. It trades about 0.05 of its potential returns per unit of risk. TUL Corporation is currently generating about -0.11 per unit of risk. If you would invest 1,795 in Wei Chuan Foods on September 14, 2024 and sell it today you would earn a total of 10.00 from holding Wei Chuan Foods or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. TUL Corp.
Performance |
| Timeline |
| Wei Chuan Foods |
| TUL Corporation |
Wei Chuan and TUL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and TUL
The main advantage of trading using opposite Wei Chuan and TUL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, TUL 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 TUL will offset losses from the drop in TUL'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 |
| TUL vs. Auras Technology Co | TUL vs. Forcecon Technology Co | TUL vs. Space Shuttle Hi Tech | TUL vs. Sunfar Computer Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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