Correlation Between Jia Jie and Wah Hong
Can any of the company-specific risk be diversified away by investing in both Jia Jie and Wah Hong 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 Jia Jie and Wah Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jia Jie Biomedical and Wah Hong Industrial, you can compare the effects of market volatilities on Jia Jie and Wah Hong 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 Jia Jie with a short position of Wah Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jia Jie and Wah Hong.
Diversification Opportunities for Jia Jie and Wah Hong
Pay attention - limited upside
The 3 months correlation between Jia and Wah is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Jia Jie Biomedical and Wah Hong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Hong Industrial and Jia Jie 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 Jia Jie Biomedical are associated (or correlated) with Wah Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Hong Industrial has no effect on the direction of Jia Jie i.e., Jia Jie and Wah Hong go up and down completely randomly.
Pair Corralation between Jia Jie and Wah Hong
Assuming the 90 days trading horizon Jia Jie Biomedical is expected to under-perform the Wah Hong. But the stock apears to be less risky and, when comparing its historical volatility, Jia Jie Biomedical is 2.96 times less risky than Wah Hong. The stock trades about -0.16 of its potential returns per unit of risk. The Wah Hong Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,550 in Wah Hong Industrial on September 2, 2024 and sell it today you would earn a total of 120.00 from holding Wah Hong Industrial or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jia Jie Biomedical vs. Wah Hong Industrial
Performance |
| Timeline |
| Jia Jie Biomedical |
| Wah Hong Industrial |
Jia Jie and Wah Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jia Jie and Wah Hong
The main advantage of trading using opposite Jia Jie and Wah Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jia Jie position performs unexpectedly, Wah Hong 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 Wah Hong will offset losses from the drop in Wah Hong's long position.| Jia Jie vs. Tung Thih Electronic | Jia Jie vs. Compal Electronics | Jia Jie vs. Microelectronics Technology | Jia Jie vs. Bright Led Electronics |
| Wah Hong vs. Hon Hai Precision | Wah Hong vs. Delta Electronics | Wah Hong vs. LARGAN Precision Co | Wah Hong vs. Yageo 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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