Correlation Between Wan Hai and Anderson Industrial
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Anderson Industrial 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 Wan Hai and Anderson Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wan Hai Lines and Anderson Industrial Corp, you can compare the effects of market volatilities on Wan Hai and Anderson Industrial 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 Wan Hai with a short position of Anderson Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Anderson Industrial.
Diversification Opportunities for Wan Hai and Anderson Industrial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wan and Anderson is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Anderson Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anderson Industrial Corp and Wan Hai 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 Wan Hai Lines are associated (or correlated) with Anderson Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anderson Industrial Corp has no effect on the direction of Wan Hai i.e., Wan Hai and Anderson Industrial go up and down completely randomly.
Pair Corralation between Wan Hai and Anderson Industrial
Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 1.09 times more return on investment than Anderson Industrial. However, Wan Hai is 1.09 times more volatile than Anderson Industrial Corp. It trades about -0.12 of its potential returns per unit of risk. Anderson Industrial Corp is currently generating about -0.35 per unit of risk. If you would invest 8,620 in Wan Hai Lines on January 14, 2025 and sell it today you would lose (1,230) from holding Wan Hai Lines or give up 14.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Anderson Industrial Corp
Performance |
| Timeline |
| Wan Hai Lines |
| Anderson Industrial Corp |
Wan Hai and Anderson Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Anderson Industrial
The main advantage of trading using opposite Wan Hai and Anderson Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Anderson Industrial 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 Anderson Industrial will offset losses from the drop in Anderson Industrial's long position.| Wan Hai vs. Yang Ming Marine | Wan Hai vs. Evergreen Marine Corp | Wan Hai vs. Eva Airways Corp | Wan Hai vs. China Airlines |
| Anderson Industrial vs. Awea Mechantronic Co | Anderson Industrial vs. Lee Chi Enterprises | Anderson Industrial vs. Kaulin Mfg | Anderson Industrial vs. Gordon Auto Body |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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