Correlation Between Wan Hai and Tze Shin
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Tze Shin 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 Tze Shin 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 Tze Shin International, you can compare the effects of market volatilities on Wan Hai and Tze Shin 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 Tze Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Tze Shin.
Diversification Opportunities for Wan Hai and Tze Shin
Very weak diversification
The 3 months correlation between Wan and Tze is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Tze Shin International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tze Shin International 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 Tze Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tze Shin International has no effect on the direction of Wan Hai i.e., Wan Hai and Tze Shin go up and down completely randomly.
Pair Corralation between Wan Hai and Tze Shin
Assuming the 90 days trading horizon Wan Hai is expected to generate 3.43 times less return on investment than Tze Shin. In addition to that, Wan Hai is 1.31 times more volatile than Tze Shin International. It trades about 0.01 of its total potential returns per unit of risk. Tze Shin International is currently generating about 0.05 per unit of volatility. If you would invest 1,415 in Tze Shin International on September 12, 2024 and sell it today you would earn a total of 850.00 from holding Tze Shin International or generate 60.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Tze Shin International
Performance |
| Timeline |
| Wan Hai Lines |
| Tze Shin International |
Wan Hai and Tze Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Tze Shin
The main advantage of trading using opposite Wan Hai and Tze Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Tze Shin 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 Tze Shin will offset losses from the drop in Tze Shin's long position.| Wan Hai vs. Yang Ming Marine | Wan Hai vs. U Ming Marine Transport | Wan Hai vs. Taiwan Navigation Co | Wan Hai vs. China Airlines |
| Tze Shin vs. Yang Ming Marine | Tze Shin vs. Wan Hai Lines | Tze Shin vs. U Ming Marine Transport | Tze Shin vs. Taiwan Navigation Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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