Correlation Between CHC Healthcare and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both CHC Healthcare 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 CHC Healthcare and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHC Healthcare Group and Wei Chuan Foods, you can compare the effects of market volatilities on CHC Healthcare 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 CHC Healthcare with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHC Healthcare and Wei Chuan.
Diversification Opportunities for CHC Healthcare and Wei Chuan
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHC and Wei is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CHC Healthcare Group 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 CHC Healthcare 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 CHC Healthcare Group 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 CHC Healthcare i.e., CHC Healthcare and Wei Chuan go up and down completely randomly.
Pair Corralation between CHC Healthcare and Wei Chuan
Assuming the 90 days trading horizon CHC Healthcare Group is expected to under-perform the Wei Chuan. In addition to that, CHC Healthcare is 3.05 times more volatile than Wei Chuan Foods. It trades about -0.05 of its total potential returns per unit of risk. Wei Chuan Foods is currently generating about -0.04 per unit of volatility. If you would invest 2,030 in Wei Chuan Foods on September 2, 2024 and sell it today you would lose (200.00) from holding Wei Chuan Foods or give up 9.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHC Healthcare Group vs. Wei Chuan Foods
Performance |
| Timeline |
| CHC Healthcare Group |
| Wei Chuan Foods |
CHC Healthcare and Wei Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHC Healthcare and Wei Chuan
The main advantage of trading using opposite CHC Healthcare and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHC Healthcare 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.| CHC Healthcare vs. Phytohealth Corp | CHC Healthcare vs. GenMont Biotech | CHC Healthcare vs. Hung Sheng Construction | CHC Healthcare vs. De Licacy Industrial |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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