Correlation Between Wah Hong and Louisa Professional
Can any of the company-specific risk be diversified away by investing in both Wah Hong and Louisa Professional 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 Wah Hong and Louisa Professional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Hong Industrial and Louisa Professional Coffee, you can compare the effects of market volatilities on Wah Hong and Louisa Professional 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 Wah Hong with a short position of Louisa Professional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Hong and Louisa Professional.
Diversification Opportunities for Wah Hong and Louisa Professional
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wah and Louisa is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wah Hong Industrial and Louisa Professional Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Louisa Professional and Wah Hong 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 Wah Hong Industrial are associated (or correlated) with Louisa Professional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Louisa Professional has no effect on the direction of Wah Hong i.e., Wah Hong and Louisa Professional go up and down completely randomly.
Pair Corralation between Wah Hong and Louisa Professional
Assuming the 90 days trading horizon Wah Hong Industrial is expected to under-perform the Louisa Professional. In addition to that, Wah Hong is 1.47 times more volatile than Louisa Professional Coffee. It trades about -0.14 of its total potential returns per unit of risk. Louisa Professional Coffee is currently generating about 0.18 per unit of volatility. If you would invest 8,707 in Louisa Professional Coffee on October 25, 2024 and sell it today you would earn a total of 523.00 from holding Louisa Professional Coffee or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wah Hong Industrial vs. Louisa Professional Coffee
Performance |
| Timeline |
| Wah Hong Industrial |
| Louisa Professional |
Wah Hong and Louisa Professional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Hong and Louisa Professional
The main advantage of trading using opposite Wah Hong and Louisa Professional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Hong position performs unexpectedly, Louisa Professional 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 Louisa Professional will offset losses from the drop in Louisa Professional's long position.| Wah Hong vs. Advantech Co | Wah Hong vs. IEI Integration Corp | Wah Hong vs. Flytech Technology Co | Wah Hong vs. Ennoconn Corp |
| Louisa Professional vs. Chinese Gamer International | Louisa Professional vs. Chialin Precision Industrial | Louisa Professional vs. Wah Hong Industrial | Louisa Professional vs. Ching Feng Home |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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