Correlation Between Hua Nan and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Hua Nan and Wei Chuan 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 Hua Nan and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Nan Financial and Wei Chuan Foods, you can compare the effects of market volatilities on Hua Nan and Wei Chuan 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 Hua Nan with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and Wei Chuan.
Diversification Opportunities for Hua Nan and Wei Chuan
Significant diversification
The 3 months correlation between Hua and Wei is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and Hua Nan 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 Hua Nan Financial are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Hua Nan i.e., Hua Nan and Wei Chuan go up and down completely randomly.
Pair Corralation between Hua Nan and Wei Chuan
Assuming the 90 days trading horizon Hua Nan Financial is expected to generate 1.53 times more return on investment than Wei Chuan. However, Hua Nan is 1.53 times more volatile than Wei Chuan Foods. It trades about 0.19 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about 0.19 per unit of risk. If you would invest 2,535 in Hua Nan Financial on August 30, 2024 and sell it today you would earn a total of 85.00 from holding Hua Nan Financial or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Nan Financial vs. Wei Chuan Foods
Performance |
| Timeline |
| Hua Nan Financial |
| Wei Chuan Foods |
Hua Nan and Wei Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and Wei Chuan
The main advantage of trading using opposite Hua Nan and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.| Hua Nan vs. Taiwan Secom Co | Hua Nan vs. TTET Union Corp | Hua Nan vs. China Steel Chemical | Hua Nan vs. Taiwan Shin Kong |
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.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |