Correlation Between Wuhan Hvsen and Namchow Food

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Can any of the company-specific risk be diversified away by investing in both Wuhan Hvsen and Namchow Food 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 Wuhan Hvsen and Namchow Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wuhan Hvsen Biotechnology and Namchow Food Group, you can compare the effects of market volatilities on Wuhan Hvsen and Namchow Food 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 Wuhan Hvsen with a short position of Namchow Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Hvsen and Namchow Food.

Diversification Opportunities for Wuhan Hvsen and Namchow Food

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Wuhan and Namchow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Hvsen Biotechnology and Namchow Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namchow Food Group and Wuhan Hvsen 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 Wuhan Hvsen Biotechnology are associated (or correlated) with Namchow Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namchow Food Group has no effect on the direction of Wuhan Hvsen i.e., Wuhan Hvsen and Namchow Food go up and down completely randomly.

Pair Corralation between Wuhan Hvsen and Namchow Food

Assuming the 90 days trading horizon Wuhan Hvsen is expected to generate 1.51 times less return on investment than Namchow Food. In addition to that, Wuhan Hvsen is 1.54 times more volatile than Namchow Food Group. It trades about 0.03 of its total potential returns per unit of risk. Namchow Food Group is currently generating about 0.07 per unit of volatility. If you would invest  1,410  in Namchow Food Group on October 7, 2024 and sell it today you would earn a total of  214.00  from holding Namchow Food Group or generate 15.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Wuhan Hvsen Biotechnology  vs.  Namchow Food Group

 Performance 
       Timeline  
Wuhan Hvsen Biotechnology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wuhan Hvsen Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Namchow Food Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Namchow Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Wuhan Hvsen and Namchow Food Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wuhan Hvsen and Namchow Food

The main advantage of trading using opposite Wuhan Hvsen and Namchow Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Hvsen position performs unexpectedly, Namchow Food 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 Namchow Food will offset losses from the drop in Namchow Food's long position.
The idea behind Wuhan Hvsen Biotechnology and Namchow Food Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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