Correlation Between Century Wind and Wah Hong
Can any of the company-specific risk be diversified away by investing in both Century Wind and Wah Hong 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 Century Wind and Wah Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and Wah Hong Industrial, you can compare the effects of market volatilities on Century Wind and Wah Hong 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 Century Wind with a short position of Wah Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and Wah Hong.
Diversification Opportunities for Century Wind and Wah Hong
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Century and Wah is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and Wah Hong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Hong Industrial and Century Wind 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 Century Wind Power are associated (or correlated) with Wah Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Hong Industrial has no effect on the direction of Century Wind i.e., Century Wind and Wah Hong go up and down completely randomly.
Pair Corralation between Century Wind and Wah Hong
Assuming the 90 days trading horizon Century Wind Power is expected to generate 1.15 times more return on investment than Wah Hong. However, Century Wind is 1.15 times more volatile than Wah Hong Industrial. It trades about 0.07 of its potential returns per unit of risk. Wah Hong Industrial is currently generating about 0.05 per unit of risk. If you would invest 16,963 in Century Wind Power on September 12, 2024 and sell it today you would earn a total of 13,037 from holding Century Wind Power or generate 76.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.71% |
| Values | Daily Returns |
Century Wind Power vs. Wah Hong Industrial
Performance |
| Timeline |
| Century Wind Power |
| Wah Hong Industrial |
Century Wind and Wah Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Wind and Wah Hong
The main advantage of trading using opposite Century Wind and Wah Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, Wah Hong 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 Wah Hong will offset losses from the drop in Wah Hong's long position.| Century Wind vs. Great Computer | Century Wind vs. RiTdisplay Corp | Century Wind vs. U Tech Media Corp | Century Wind vs. Pili International Multimedia |
| Wah Hong vs. Tatung System Technologies | Wah Hong vs. Taiwan Chinsan Electronic | Wah Hong vs. Alcor Micro | Wah Hong vs. AVY Precision Technology |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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