Correlation Between Wan Hai and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Chernan Metal 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 Chernan Metal 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 Chernan Metal Industrial, you can compare the effects of market volatilities on Wan Hai and Chernan Metal 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 Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Chernan Metal.
Diversification Opportunities for Wan Hai and Chernan Metal
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wan and Chernan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Wan Hai i.e., Wan Hai and Chernan Metal go up and down completely randomly.
Pair Corralation between Wan Hai and Chernan Metal
Assuming the 90 days trading horizon Wan Hai Lines is expected to under-perform the Chernan Metal. But the stock apears to be less risky and, when comparing its historical volatility, Wan Hai Lines is 1.02 times less risky than Chernan Metal. The stock trades about -0.15 of its potential returns per unit of risk. The Chernan Metal Industrial is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 4,180 in Chernan Metal Industrial on September 3, 2024 and sell it today you would lose (125.00) from holding Chernan Metal Industrial or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Chernan Metal Industrial
Performance |
| Timeline |
| Wan Hai Lines |
| Chernan Metal Industrial |
Wan Hai and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Chernan Metal
The main advantage of trading using opposite Wan Hai and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal'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 |
| Chernan Metal vs. Catcher Technology Co | Chernan Metal vs. Evergreen Steel Corp | Chernan Metal vs. China Metal Products |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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