Correlation Between Wah Hong and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Wah Hong and Asia Electronic 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 Asia Electronic 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 Asia Electronic Material, you can compare the effects of market volatilities on Wah Hong and Asia Electronic 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 Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Hong and Asia Electronic.
Diversification Opportunities for Wah Hong and Asia Electronic
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wah and Asia is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wah Hong Industrial and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material 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 Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Wah Hong i.e., Wah Hong and Asia Electronic go up and down completely randomly.
Pair Corralation between Wah Hong and Asia Electronic
Assuming the 90 days trading horizon Wah Hong Industrial is expected to under-perform the Asia Electronic. In addition to that, Wah Hong is 2.56 times more volatile than Asia Electronic Material. It trades about -0.23 of its total potential returns per unit of risk. Asia Electronic Material is currently generating about -0.29 per unit of volatility. If you would invest 2,055 in Asia Electronic Material on November 7, 2024 and sell it today you would lose (75.00) from holding Asia Electronic Material or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
Wah Hong Industrial vs. Asia Electronic Material
Performance |
| Timeline |
| Wah Hong Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Asia Electronic Material |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Wah Hong and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Hong and Asia Electronic
The main advantage of trading using opposite Wah Hong and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Hong position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic's long position.The idea behind Wah Hong Industrial and Asia Electronic Material pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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