Correlation Between Chang Hwa and Wan Hai
Can any of the company-specific risk be diversified away by investing in both Chang Hwa and Wan Hai 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 Chang Hwa and Wan Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chang Hwa Commercial and Wan Hai Lines, you can compare the effects of market volatilities on Chang Hwa and Wan Hai 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 Chang Hwa with a short position of Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chang Hwa and Wan Hai.
Diversification Opportunities for Chang Hwa and Wan Hai
Weak diversification
The 3 months correlation between Chang and Wan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Chang Hwa Commercial and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines and Chang Hwa 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 Chang Hwa Commercial are associated (or correlated) with Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of Chang Hwa i.e., Chang Hwa and Wan Hai go up and down completely randomly.
Pair Corralation between Chang Hwa and Wan Hai
Assuming the 90 days trading horizon Chang Hwa Commercial is expected to under-perform the Wan Hai. But the stock apears to be less risky and, when comparing its historical volatility, Chang Hwa Commercial is 4.28 times less risky than Wan Hai. The stock trades about 0.0 of its potential returns per unit of risk. The Wan Hai Lines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,935 in Wan Hai Lines on September 1, 2024 and sell it today you would earn a total of 3,365 from holding Wan Hai Lines or generate 68.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chang Hwa Commercial vs. Wan Hai Lines
Performance |
| Timeline |
| Chang Hwa Commercial |
| Wan Hai Lines |
Chang Hwa and Wan Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chang Hwa and Wan Hai
The main advantage of trading using opposite Chang Hwa and Wan Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chang Hwa position performs unexpectedly, Wan Hai 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 Wan Hai will offset losses from the drop in Wan Hai's long position.| Chang Hwa vs. Central Reinsurance Corp | Chang Hwa vs. Huaku Development Co | Chang Hwa vs. Fubon Financial Holding |
| Wan Hai vs. BES Engineering Co | Wan Hai vs. Continental Holdings Corp | Wan Hai vs. Kee Tai Properties | Wan Hai vs. Hung Sheng Construction |
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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