Correlation Between Wan Hai and Sunspring Metal
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Sunspring Metal 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 Sunspring Metal 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 Sunspring Metal Corp, you can compare the effects of market volatilities on Wan Hai and Sunspring Metal 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 Sunspring Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Sunspring Metal.
Diversification Opportunities for Wan Hai and Sunspring Metal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wan and Sunspring is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal 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 Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of Wan Hai i.e., Wan Hai and Sunspring Metal go up and down completely randomly.
Pair Corralation between Wan Hai and Sunspring Metal
Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 0.8 times more return on investment than Sunspring Metal. However, Wan Hai Lines is 1.26 times less risky than Sunspring Metal. It trades about -0.13 of its potential returns per unit of risk. Sunspring Metal Corp is currently generating about -0.29 per unit of risk. If you would invest 8,080 in Wan Hai Lines on October 20, 2024 and sell it today you would lose (420.00) from holding Wan Hai Lines or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Sunspring Metal Corp
Performance |
| Timeline |
| Wan Hai Lines |
| Sunspring Metal Corp |
Wan Hai and Sunspring Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Sunspring Metal
The main advantage of trading using opposite Wan Hai and Sunspring Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Sunspring Metal 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 Sunspring Metal will offset losses from the drop in Sunspring Metal's long position.| Wan Hai vs. Basso Industry Corp | Wan Hai vs. TYC Brother Industrial | Wan Hai vs. Chung Hsin Electric Machinery | Wan Hai vs. Kinik Co |
| Sunspring Metal vs. Makalot Industrial Co | Sunspring Metal vs. Eternal Materials Co | Sunspring Metal vs. Feng Tay Enterprises | Sunspring Metal vs. Taiwan Fu Hsing |
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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