Correlation Between Wah Hong and Ma Kuang
Can any of the company-specific risk be diversified away by investing in both Wah Hong and Ma Kuang 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 Ma Kuang 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 Ma Kuang Healthcare, you can compare the effects of market volatilities on Wah Hong and Ma Kuang 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 Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Hong and Ma Kuang.
Diversification Opportunities for Wah Hong and Ma Kuang
Very good diversification
The 3 months correlation between Wah and 4139 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wah Hong Industrial and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare 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 Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of Wah Hong i.e., Wah Hong and Ma Kuang go up and down completely randomly.
Pair Corralation between Wah Hong and Ma Kuang
Assuming the 90 days trading horizon Wah Hong Industrial is expected to generate 3.29 times more return on investment than Ma Kuang. However, Wah Hong is 3.29 times more volatile than Ma Kuang Healthcare. It trades about 0.21 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about -0.12 per unit of risk. If you would invest 4,265 in Wah Hong Industrial on August 30, 2024 and sell it today you would earn a total of 1,015 from holding Wah Hong Industrial or generate 23.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wah Hong Industrial vs. Ma Kuang Healthcare
Performance |
| Timeline |
| Wah Hong Industrial |
| Ma Kuang Healthcare |
Wah Hong and Ma Kuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Hong and Ma Kuang
The main advantage of trading using opposite Wah Hong and Ma Kuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Hong position performs unexpectedly, Ma Kuang 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 Ma Kuang will offset losses from the drop in Ma Kuang's long position.| Wah Hong vs. Tatung System Technologies | Wah Hong vs. Taiwan Chinsan Electronic | Wah Hong vs. Alcor Micro | Wah Hong vs. AVY Precision Technology |
| Ma Kuang vs. Sunnic Technology Merchandise | Ma Kuang vs. Sun Sea Construction | Ma Kuang vs. Formosa International Hotels | Ma Kuang vs. Hung Sheng Construction |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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