Correlation Between Wisdom Marine and Hota Industrial
Can any of the company-specific risk be diversified away by investing in both Wisdom Marine and Hota Industrial 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 Wisdom Marine and Hota Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wisdom Marine Lines and Hota Industrial Mfg, you can compare the effects of market volatilities on Wisdom Marine and Hota Industrial 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 Wisdom Marine with a short position of Hota Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisdom Marine and Hota Industrial.
Diversification Opportunities for Wisdom Marine and Hota Industrial
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wisdom and Hota is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wisdom Marine Lines and Hota Industrial Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hota Industrial Mfg and Wisdom Marine 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 Wisdom Marine Lines are associated (or correlated) with Hota Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hota Industrial Mfg has no effect on the direction of Wisdom Marine i.e., Wisdom Marine and Hota Industrial go up and down completely randomly.
Pair Corralation between Wisdom Marine and Hota Industrial
Assuming the 90 days trading horizon Wisdom Marine Lines is expected to under-perform the Hota Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Wisdom Marine Lines is 1.77 times less risky than Hota Industrial. The stock trades about -0.29 of its potential returns per unit of risk. The Hota Industrial Mfg is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6,110 in Hota Industrial Mfg on October 9, 2024 and sell it today you would earn a total of 690.00 from holding Hota Industrial Mfg or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wisdom Marine Lines vs. Hota Industrial Mfg
Performance |
| Timeline |
| Wisdom Marine Lines |
| Hota Industrial Mfg |
Wisdom Marine and Hota Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wisdom Marine and Hota Industrial
The main advantage of trading using opposite Wisdom Marine and Hota Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wisdom Marine position performs unexpectedly, Hota Industrial 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 Hota Industrial will offset losses from the drop in Hota Industrial's long position.| Wisdom Marine vs. U Ming Marine Transport | Wisdom Marine vs. Wan Hai Lines | Wisdom Marine vs. Yang Ming Marine | Wisdom Marine vs. Shih Wei Navigation |
| Hota Industrial vs. BizLink Holding | Hota Industrial vs. Delta Electronics | Hota Industrial vs. Eclat Textile Co | Hota Industrial vs. Chroma ATE |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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