Correlation Between Wan Hai and Chia Yi
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Chia Yi 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 Chia Yi 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 Chia Yi Steel, you can compare the effects of market volatilities on Wan Hai and Chia Yi 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 Chia Yi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Chia Yi.
Diversification Opportunities for Wan Hai and Chia Yi
Significant diversification
The 3 months correlation between Wan and Chia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Chia Yi Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Yi Steel 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 Chia Yi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Yi Steel has no effect on the direction of Wan Hai i.e., Wan Hai and Chia Yi go up and down completely randomly.
Pair Corralation between Wan Hai and Chia Yi
Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 1.26 times more return on investment than Chia Yi. However, Wan Hai is 1.26 times more volatile than Chia Yi Steel. It trades about 0.12 of its potential returns per unit of risk. Chia Yi Steel is currently generating about 0.0 per unit of risk. If you would invest 4,410 in Wan Hai Lines on September 3, 2024 and sell it today you would earn a total of 3,890 from holding Wan Hai Lines or generate 88.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Chia Yi Steel
Performance |
| Timeline |
| Wan Hai Lines |
| Chia Yi Steel |
Wan Hai and Chia Yi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Chia Yi
The main advantage of trading using opposite Wan Hai and Chia Yi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Chia Yi 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 Chia Yi will offset losses from the drop in Chia Yi'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 |
| Chia Yi vs. Catcher Technology Co | Chia Yi vs. Evergreen Steel Corp | Chia Yi vs. China Metal Products | Chia Yi vs. Chernan Metal Industrial |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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