Correlation Between WPG Holdings and Chung Hwa
Can any of the company-specific risk be diversified away by investing in both WPG Holdings and Chung Hwa 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 Chung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WPG Holdings and Chung Hwa Food, you can compare the effects of market volatilities on WPG Holdings and Chung Hwa 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 Chung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPG Holdings and Chung Hwa.
Diversification Opportunities for WPG Holdings and Chung Hwa
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WPG and Chung is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding WPG Holdings and Chung Hwa Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hwa Food 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 Chung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hwa Food has no effect on the direction of WPG Holdings i.e., WPG Holdings and Chung Hwa go up and down completely randomly.
Pair Corralation between WPG Holdings and Chung Hwa
Assuming the 90 days trading horizon WPG Holdings is expected to generate 0.61 times more return on investment than Chung Hwa. However, WPG Holdings is 1.64 times less risky than Chung Hwa. It trades about 0.09 of its potential returns per unit of risk. Chung Hwa Food is currently generating about -0.03 per unit of risk. If you would invest 4,438 in WPG Holdings on September 3, 2024 and sell it today you would earn a total of 702.00 from holding WPG Holdings or generate 15.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WPG Holdings vs. Chung Hwa Food
Performance |
| Timeline |
| WPG Holdings |
| Chung Hwa Food |
WPG Holdings and Chung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WPG Holdings and Chung Hwa
The main advantage of trading using opposite WPG Holdings and Chung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WPG Holdings position performs unexpectedly, Chung Hwa 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 Chung Hwa will offset losses from the drop in Chung Hwa's long position.| WPG Holdings vs. Genovate Biotechnology Co | WPG Holdings vs. Arbor Technology | WPG Holdings vs. STL Technology Co | WPG Holdings vs. Posiflex Technology |
| Chung Hwa vs. Uni President Enterprises Corp | Chung Hwa vs. Lien Hwa Industrial | Chung Hwa vs. Great Wall Enterprise | Chung Hwa 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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