Correlation Between Wan Hai and Chia Chang
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Chia Chang 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 Chia Chang 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 Chia Chang Co, you can compare the effects of market volatilities on Wan Hai and Chia Chang 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 Chia Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Chia Chang.
Diversification Opportunities for Wan Hai and Chia Chang
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wan and Chia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Chia Chang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Chang 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 Chia Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Chang has no effect on the direction of Wan Hai i.e., Wan Hai and Chia Chang go up and down completely randomly.
Pair Corralation between Wan Hai and Chia Chang
Assuming the 90 days trading horizon Wan Hai Lines is expected to under-perform the Chia Chang. In addition to that, Wan Hai is 1.54 times more volatile than Chia Chang Co. It trades about -0.22 of its total potential returns per unit of risk. Chia Chang Co is currently generating about -0.13 per unit of volatility. If you would invest 4,260 in Chia Chang Co on September 12, 2024 and sell it today you would lose (170.00) from holding Chia Chang Co or give up 3.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Chia Chang Co
Performance |
| Timeline |
| Wan Hai Lines |
| Chia Chang |
Wan Hai and Chia Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Chia Chang
The main advantage of trading using opposite Wan Hai and Chia Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Chia Chang 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 Chia Chang will offset losses from the drop in Chia Chang'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 |
| Chia Chang vs. Yang Ming Marine | Chia Chang vs. Wan Hai Lines | Chia Chang vs. U Ming Marine Transport | Chia Chang 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 Stocks Directory module to find actively traded stocks across global markets.
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