Correlation Between Wanhwa Enterprise and Chateau International
Can any of the company-specific risk be diversified away by investing in both Wanhwa Enterprise and Chateau International 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 Wanhwa Enterprise and Chateau International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wanhwa Enterprise Co and Chateau International Development, you can compare the effects of market volatilities on Wanhwa Enterprise and Chateau International 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 Wanhwa Enterprise with a short position of Chateau International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhwa Enterprise and Chateau International.
Diversification Opportunities for Wanhwa Enterprise and Chateau International
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wanhwa and Chateau is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wanhwa Enterprise Co and Chateau International Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chateau International and Wanhwa Enterprise 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 Wanhwa Enterprise Co are associated (or correlated) with Chateau International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chateau International has no effect on the direction of Wanhwa Enterprise i.e., Wanhwa Enterprise and Chateau International go up and down completely randomly.
Pair Corralation between Wanhwa Enterprise and Chateau International
Assuming the 90 days trading horizon Wanhwa Enterprise Co is expected to under-perform the Chateau International. But the stock apears to be less risky and, when comparing its historical volatility, Wanhwa Enterprise Co is 2.15 times less risky than Chateau International. The stock trades about -0.23 of its potential returns per unit of risk. The Chateau International Development is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,320 in Chateau International Development on October 9, 2024 and sell it today you would earn a total of 10.00 from holding Chateau International Development or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Wanhwa Enterprise Co vs. Chateau International Developm
Performance |
| Timeline |
| Wanhwa Enterprise |
| Chateau International |
Wanhwa Enterprise and Chateau International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhwa Enterprise and Chateau International
The main advantage of trading using opposite Wanhwa Enterprise and Chateau International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhwa Enterprise position performs unexpectedly, Chateau International 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 Chateau International will offset losses from the drop in Chateau International's long position.| Wanhwa Enterprise vs. First Hotel Co | Wanhwa Enterprise vs. Ambassador Hotel | Wanhwa Enterprise vs. Formosa International Hotels | Wanhwa Enterprise vs. Leofoo Development Co |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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