Correlation Between Wisher Industrial and Lian Hwa
Can any of the company-specific risk be diversified away by investing in both Wisher Industrial and Lian Hwa 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 Wisher Industrial and Lian Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wisher Industrial Co and Lian Hwa Foods, you can compare the effects of market volatilities on Wisher Industrial and Lian Hwa 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 Wisher Industrial with a short position of Lian Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisher Industrial and Lian Hwa.
Diversification Opportunities for Wisher Industrial and Lian Hwa
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wisher and Lian is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Wisher Industrial Co and Lian Hwa Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lian Hwa Foods and Wisher Industrial 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 Wisher Industrial Co are associated (or correlated) with Lian Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lian Hwa Foods has no effect on the direction of Wisher Industrial i.e., Wisher Industrial and Lian Hwa go up and down completely randomly.
Pair Corralation between Wisher Industrial and Lian Hwa
Assuming the 90 days trading horizon Wisher Industrial is expected to generate 3.22 times less return on investment than Lian Hwa. But when comparing it to its historical volatility, Wisher Industrial Co is 1.32 times less risky than Lian Hwa. It trades about 0.03 of its potential returns per unit of risk. Lian Hwa Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,450 in Lian Hwa Foods on August 31, 2024 and sell it today you would earn a total of 4,550 from holding Lian Hwa Foods or generate 61.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wisher Industrial Co vs. Lian Hwa Foods
Performance |
| Timeline |
| Wisher Industrial |
| Lian Hwa Foods |
Wisher Industrial and Lian Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wisher Industrial and Lian Hwa
The main advantage of trading using opposite Wisher Industrial and Lian Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wisher Industrial position performs unexpectedly, Lian Hwa 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 Lian Hwa will offset losses from the drop in Lian Hwa's long position.| Wisher Industrial vs. De Licacy Industrial | Wisher Industrial vs. Nien Hsing Textile | Wisher Industrial vs. Tainan Enterprises Co | Wisher Industrial vs. Tex Ray Industrial Co |
| Lian Hwa vs. Taisun Enterprise Co | Lian Hwa vs. De Licacy Industrial | Lian Hwa vs. Wisher Industrial Co | Lian Hwa vs. Tainan Enterprises 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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