Correlation Between WPG Holdings and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both WPG Holdings and Tehmag Foods 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 WPG Holdings and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPG Holdings and Tehmag Foods, you can compare the effects of market volatilities on WPG Holdings and Tehmag Foods 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 WPG Holdings with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPG Holdings and Tehmag Foods.
Diversification Opportunities for WPG Holdings and Tehmag Foods
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WPG and Tehmag is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding WPG Holdings and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and WPG Holdings 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 WPG Holdings are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of WPG Holdings i.e., WPG Holdings and Tehmag Foods go up and down completely randomly.
Pair Corralation between WPG Holdings and Tehmag Foods
Assuming the 90 days trading horizon WPG Holdings is expected to generate 0.94 times more return on investment than Tehmag Foods. However, WPG Holdings is 1.06 times less risky than Tehmag Foods. It trades about 0.14 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.03 per unit of risk. If you would invest 4,691 in WPG Holdings on September 4, 2024 and sell it today you would earn a total of 439.00 from holding WPG Holdings or generate 9.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPG Holdings vs. Tehmag Foods
Performance |
| Timeline |
| WPG Holdings |
| Tehmag Foods |
WPG Holdings and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPG Holdings and Tehmag Foods
The main advantage of trading using opposite WPG Holdings and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPG Holdings position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| WPG Holdings vs. Tehmag Foods | WPG Holdings vs. Arima Communications Corp | WPG Holdings vs. WinMate Communication INC | WPG Holdings vs. Mercuries Life Insurance |
| Tehmag Foods vs. Uni President Enterprises Corp | Tehmag Foods vs. Lien Hwa Industrial | Tehmag Foods vs. Great Wall Enterprise | Tehmag Foods vs. Standard Foods Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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