Correlation Between Wan Hai and Daxin Materials
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Daxin Materials 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 Daxin Materials 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 Daxin Materials Corp, you can compare the effects of market volatilities on Wan Hai and Daxin Materials 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 Daxin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Daxin Materials.
Diversification Opportunities for Wan Hai and Daxin Materials
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wan and Daxin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Daxin Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daxin Materials Corp 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 Daxin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daxin Materials Corp has no effect on the direction of Wan Hai i.e., Wan Hai and Daxin Materials go up and down completely randomly.
Pair Corralation between Wan Hai and Daxin Materials
Assuming the 90 days trading horizon Wan Hai Lines is expected to under-perform the Daxin Materials. In addition to that, Wan Hai is 1.05 times more volatile than Daxin Materials Corp. It trades about 0.0 of its total potential returns per unit of risk. Daxin Materials Corp is currently generating about 0.02 per unit of volatility. If you would invest 22,650 in Daxin Materials Corp on August 30, 2024 and sell it today you would earn a total of 50.00 from holding Daxin Materials Corp or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wan Hai Lines vs. Daxin Materials Corp
Performance |
| Timeline |
| Wan Hai Lines |
| Daxin Materials Corp |
Wan Hai and Daxin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and Daxin Materials
The main advantage of trading using opposite Wan Hai and Daxin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Daxin Materials 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 Daxin Materials will offset losses from the drop in Daxin Materials' long position.| Wan Hai vs. Yulon Motor Co | Wan Hai vs. Far Eastern Department | Wan Hai vs. China Steel Corp | Wan Hai vs. Chang Hwa Commercial |
| Daxin Materials vs. Topco Scientific Co | Daxin Materials vs. Holtek Semiconductor | Daxin Materials vs. Greatek Electronics | Daxin Materials vs. Stark Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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