Correlation Between De Licacy and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both De Licacy and Wei Chuan 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 De Licacy and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Licacy Industrial and Wei Chuan Foods, you can compare the effects of market volatilities on De Licacy and Wei Chuan 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 De Licacy with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Licacy and Wei Chuan.
Diversification Opportunities for De Licacy and Wei Chuan
Very good diversification
The 3 months correlation between 1464 and Wei is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and De Licacy 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 De Licacy Industrial are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of De Licacy i.e., De Licacy and Wei Chuan go up and down completely randomly.
Pair Corralation between De Licacy and Wei Chuan
Assuming the 90 days trading horizon De Licacy Industrial is expected to under-perform the Wei Chuan. In addition to that, De Licacy is 5.37 times more volatile than Wei Chuan Foods. It trades about -0.05 of its total potential returns per unit of risk. Wei Chuan Foods is currently generating about 0.15 per unit of volatility. If you would invest 1,800 in Wei Chuan Foods on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Wei Chuan Foods or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Licacy Industrial vs. Wei Chuan Foods
Performance |
| Timeline |
| De Licacy Industrial |
| Wei Chuan Foods |
De Licacy and Wei Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Licacy and Wei Chuan
The main advantage of trading using opposite De Licacy and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Licacy position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.| De Licacy vs. Tainan Spinning Co | De Licacy vs. Chia Her Industrial | De Licacy vs. WiseChip Semiconductor | De Licacy vs. Novatek Microelectronics Corp |
| Wei Chuan vs. Standard Foods Corp | Wei Chuan vs. TTET Union Corp | Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Charoen Pokphand Enterprise |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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