Correlation Between Eternal Materials and Wayi International
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Wayi International 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 Eternal Materials and Wayi International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Wayi International Digital, you can compare the effects of market volatilities on Eternal Materials and Wayi International 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 Eternal Materials with a short position of Wayi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Wayi International.
Diversification Opportunities for Eternal Materials and Wayi International
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eternal and Wayi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Wayi International Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayi International and Eternal Materials 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 Eternal Materials Co are associated (or correlated) with Wayi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayi International has no effect on the direction of Eternal Materials i.e., Eternal Materials and Wayi International go up and down completely randomly.
Pair Corralation between Eternal Materials and Wayi International
Assuming the 90 days trading horizon Eternal Materials Co is expected to under-perform the Wayi International. But the stock apears to be less risky and, when comparing its historical volatility, Eternal Materials Co is 2.75 times less risky than Wayi International. The stock trades about -0.02 of its potential returns per unit of risk. The Wayi International Digital is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,000 in Wayi International Digital on September 3, 2024 and sell it today you would earn a total of 3,050 from holding Wayi International Digital or generate 23.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternal Materials Co vs. Wayi International Digital
Performance |
| Timeline |
| Eternal Materials |
| Wayi International |
Eternal Materials and Wayi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Wayi International
The main advantage of trading using opposite Eternal Materials and Wayi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Wayi International 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 Wayi International will offset losses from the drop in Wayi International's long position.The idea behind Eternal Materials Co and Wayi International Digital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Wayi International vs. Shan Loong Transportation Co | Wayi International vs. Daxin Materials Corp | Wayi International vs. Medigen Biotechnology | Wayi International vs. Eternal Materials 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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