Correlation Between Wan Hai and Chinese Maritime
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Chinese Maritime 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 Chinese Maritime 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 Chinese Maritime Transport, you can compare the effects of market volatilities on Wan Hai and Chinese Maritime 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 Chinese Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Chinese Maritime.
Diversification Opportunities for Wan Hai and Chinese Maritime
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wan and Chinese is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Chinese Maritime Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Maritime Tra 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 Chinese Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Maritime Tra has no effect on the direction of Wan Hai i.e., Wan Hai and Chinese Maritime go up and down completely randomly.
Pair Corralation between Wan Hai and Chinese Maritime
Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 1.76 times more return on investment than Chinese Maritime. However, Wan Hai is 1.76 times more volatile than Chinese Maritime Transport. It trades about -0.2 of its potential returns per unit of risk. Chinese Maritime Transport is currently generating about -0.37 per unit of risk. If you would invest 9,130 in Wan Hai Lines on September 13, 2024 and sell it today you would lose (840.00) from holding Wan Hai Lines or give up 9.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Chinese Maritime Transport
Performance |
| Timeline |
| Wan Hai Lines |
| Chinese Maritime Tra |
Wan Hai and Chinese Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Chinese Maritime
The main advantage of trading using opposite Wan Hai and Chinese Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Chinese Maritime 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 Chinese Maritime will offset losses from the drop in Chinese Maritime'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 |
| Chinese Maritime vs. U Ming Marine Transport | Chinese Maritime vs. Sincere Navigation Corp | Chinese Maritime vs. Taiwan Navigation Co | Chinese Maritime vs. Huaku Development 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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