Correlation Between Wan Hai and Sincere Navigation
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Sincere Navigation 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 Sincere Navigation 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 Sincere Navigation Corp, you can compare the effects of market volatilities on Wan Hai and Sincere Navigation 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 Sincere Navigation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Sincere Navigation.
Diversification Opportunities for Wan Hai and Sincere Navigation
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wan and Sincere is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Sincere Navigation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincere Navigation 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 Sincere Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincere Navigation Corp has no effect on the direction of Wan Hai i.e., Wan Hai and Sincere Navigation go up and down completely randomly.
Pair Corralation between Wan Hai and Sincere Navigation
Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 1.68 times more return on investment than Sincere Navigation. However, Wan Hai is 1.68 times more volatile than Sincere Navigation Corp. It trades about 0.03 of its potential returns per unit of risk. Sincere Navigation Corp is currently generating about -0.06 per unit of risk. If you would invest 7,970 in Wan Hai Lines on August 29, 2024 and sell it today you would earn a total of 480.00 from holding Wan Hai Lines or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Sincere Navigation Corp
Performance |
| Timeline |
| Wan Hai Lines |
| Sincere Navigation Corp |
Wan Hai and Sincere Navigation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Sincere Navigation
The main advantage of trading using opposite Wan Hai and Sincere Navigation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Sincere Navigation 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 Sincere Navigation will offset losses from the drop in Sincere Navigation's long position.| Wan Hai vs. Yulon Motor Co | Wan Hai vs. Far Eastern Department | Wan Hai vs. China Steel Corp | Wan Hai vs. Chang Hwa Commercial |
| Sincere Navigation vs. U Ming Marine Transport | Sincere Navigation vs. First Steamship Co | Sincere Navigation vs. Evergreen International Storage | Sincere Navigation vs. Wan Hai Lines |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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