Correlation Between Kedge Construction and Wan Hai
Can any of the company-specific risk be diversified away by investing in both Kedge Construction and Wan Hai 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 Kedge Construction and Wan Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kedge Construction Co and Wan Hai Lines, you can compare the effects of market volatilities on Kedge Construction and Wan Hai 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 Kedge Construction with a short position of Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedge Construction and Wan Hai.
Diversification Opportunities for Kedge Construction and Wan Hai
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kedge and Wan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kedge Construction Co and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines and Kedge Construction 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 Kedge Construction Co are associated (or correlated) with Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of Kedge Construction i.e., Kedge Construction and Wan Hai go up and down completely randomly.
Pair Corralation between Kedge Construction and Wan Hai
Assuming the 90 days trading horizon Kedge Construction Co is expected to generate 0.54 times more return on investment than Wan Hai. However, Kedge Construction Co is 1.84 times less risky than Wan Hai. It trades about -0.18 of its potential returns per unit of risk. Wan Hai Lines is currently generating about -0.28 per unit of risk. If you would invest 7,480 in Kedge Construction Co on September 18, 2024 and sell it today you would lose (340.00) from holding Kedge Construction Co or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kedge Construction Co vs. Wan Hai Lines
Performance |
| Timeline |
| Kedge Construction |
| Wan Hai Lines |
Kedge Construction and Wan Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedge Construction and Wan Hai
The main advantage of trading using opposite Kedge Construction and Wan Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedge Construction position performs unexpectedly, Wan Hai 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 Wan Hai will offset losses from the drop in Wan Hai's long position.| Kedge Construction vs. Wan Hai Lines | Kedge Construction vs. U Ming Marine Transport | Kedge Construction vs. China Airlines |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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