Correlation Between Wei Chuan and Dadi Early
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Dadi Early 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 Dadi Early 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 Dadi Early Childhood Education, you can compare the effects of market volatilities on Wei Chuan and Dadi Early 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 Dadi Early. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Dadi Early.
Diversification Opportunities for Wei Chuan and Dadi Early
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wei and Dadi is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Dadi Early Childhood Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dadi Early Childhood 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 Dadi Early. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dadi Early Childhood has no effect on the direction of Wei Chuan i.e., Wei Chuan and Dadi Early go up and down completely randomly.
Pair Corralation between Wei Chuan and Dadi Early
Assuming the 90 days trading horizon Wei Chuan Foods is expected to generate 0.44 times more return on investment than Dadi Early. However, Wei Chuan Foods is 2.28 times less risky than Dadi Early. It trades about 0.19 of its potential returns per unit of risk. Dadi Early Childhood Education is currently generating about -0.2 per unit of risk. If you would invest 1,790 in Wei Chuan Foods on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Wei Chuan Foods or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chuan Foods vs. Dadi Early Childhood Education
Performance |
| Timeline |
| Wei Chuan Foods |
| Dadi Early Childhood |
Wei Chuan and Dadi Early Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chuan and Dadi Early
The main advantage of trading using opposite Wei Chuan and Dadi Early positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Dadi Early 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 Dadi Early will offset losses from the drop in Dadi Early'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 |
| Dadi Early vs. Sporton International | Dadi Early vs. Simple Mart Retail | Dadi Early vs. Chung Hwa Food | Dadi Early vs. Cleanaway 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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