Correlation Between Sunny Friend and Wan Hai
Can any of the company-specific risk be diversified away by investing in both Sunny Friend and Wan Hai 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 Sunny Friend and Wan Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Friend Environmental and Wan Hai Lines, you can compare the effects of market volatilities on Sunny Friend and Wan Hai 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 Sunny Friend with a short position of Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Wan Hai.
Diversification Opportunities for Sunny Friend and Wan Hai
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sunny and Wan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines and Sunny Friend 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 Sunny Friend Environmental are associated (or correlated) with Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of Sunny Friend i.e., Sunny Friend and Wan Hai go up and down completely randomly.
Pair Corralation between Sunny Friend and Wan Hai
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Wan Hai. But the stock apears to be less risky and, when comparing its historical volatility, Sunny Friend Environmental is 1.75 times less risky than Wan Hai. The stock trades about -0.18 of its potential returns per unit of risk. The Wan Hai Lines is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,860 in Wan Hai Lines on August 28, 2024 and sell it today you would earn a total of 210.00 from holding Wan Hai Lines or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Wan Hai Lines
Performance |
| Timeline |
| Sunny Friend Environ |
| Wan Hai Lines |
Sunny Friend and Wan Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Wan Hai
The main advantage of trading using opposite Sunny Friend and Wan Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend position performs unexpectedly, Wan Hai 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 Wan Hai will offset losses from the drop in Wan Hai's long position.| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
| Wan Hai vs. Sunny Friend Environmental | Wan Hai vs. TTET Union Corp | Wan Hai vs. ECOVE Environment Corp | Wan Hai vs. Yulon Finance Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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