Correlation Between Wan Hai and Cayman Tung
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Cayman Tung 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 Cayman Tung 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 Cayman Tung Ling, you can compare the effects of market volatilities on Wan Hai and Cayman Tung 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 Cayman Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Cayman Tung.
Diversification Opportunities for Wan Hai and Cayman Tung
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wan and Cayman is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Cayman Tung Ling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayman Tung Ling 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 Cayman Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayman Tung Ling has no effect on the direction of Wan Hai i.e., Wan Hai and Cayman Tung go up and down completely randomly.
Pair Corralation between Wan Hai and Cayman Tung
Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 0.87 times more return on investment than Cayman Tung. However, Wan Hai Lines is 1.15 times less risky than Cayman Tung. It trades about 0.03 of its potential returns per unit of risk. Cayman Tung Ling is currently generating about 0.01 per unit of risk. If you would invest 7,780 in Wan Hai Lines on August 28, 2024 and sell it today you would earn a total of 1,290 from holding Wan Hai Lines or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Wan Hai Lines vs. Cayman Tung Ling
Performance |
| Timeline |
| Wan Hai Lines |
| Cayman Tung Ling |
Wan Hai and Cayman Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Cayman Tung
The main advantage of trading using opposite Wan Hai and Cayman Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Cayman Tung 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 Cayman Tung will offset losses from the drop in Cayman Tung's long position.| Wan Hai vs. Sunny Friend Environmental | Wan Hai vs. TTET Union Corp | Wan Hai vs. ECOVE Environment Corp | Wan Hai vs. Yulon Finance Corp |
| Cayman Tung vs. Dynamic Medical Technologies | Cayman Tung vs. Louisa Professional Coffee | Cayman Tung vs. PlayNitride | Cayman Tung vs. Emerging Display Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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