Correlation Between Song Ho and Wha Yu
Can any of the company-specific risk be diversified away by investing in both Song Ho and Wha Yu 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 Song Ho and Wha Yu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Ho Industrial and Wha Yu Industrial, you can compare the effects of market volatilities on Song Ho and Wha Yu 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 Song Ho with a short position of Wha Yu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Ho and Wha Yu.
Diversification Opportunities for Song Ho and Wha Yu
Good diversification
The 3 months correlation between Song and Wha is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Song Ho Industrial and Wha Yu Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wha Yu Industrial and Song Ho 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 Song Ho Industrial are associated (or correlated) with Wha Yu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wha Yu Industrial has no effect on the direction of Song Ho i.e., Song Ho and Wha Yu go up and down completely randomly.
Pair Corralation between Song Ho and Wha Yu
Assuming the 90 days trading horizon Song Ho Industrial is expected to under-perform the Wha Yu. But the stock apears to be less risky and, when comparing its historical volatility, Song Ho Industrial is 4.41 times less risky than Wha Yu. The stock trades about -0.03 of its potential returns per unit of risk. The Wha Yu Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,670 in Wha Yu Industrial on September 3, 2024 and sell it today you would earn a total of 260.00 from holding Wha Yu Industrial or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
Song Ho Industrial vs. Wha Yu Industrial
Performance |
| Timeline |
| Song Ho Industrial |
| Wha Yu Industrial |
Song Ho and Wha Yu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Ho and Wha Yu
The main advantage of trading using opposite Song Ho and Wha Yu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Ho position performs unexpectedly, Wha Yu 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 Wha Yu will offset losses from the drop in Wha Yu's long position.| Song Ho vs. Thunder Tiger Corp | Song Ho vs. Synmosa Biopharma | Song Ho vs. Oriental Union Chemical | Song Ho vs. Ruentex Development Co |
| Wha Yu vs. Taiwan Semiconductor Manufacturing | Wha Yu vs. Yang Ming Marine | Wha Yu vs. ASE Industrial Holding | Wha Yu vs. AU Optronics |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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