Correlation Between Man Wah and SEB SA
Can any of the company-specific risk be diversified away by investing in both Man Wah and SEB SA 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 Man Wah and SEB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Man Wah Holdings and SEB SA, you can compare the effects of market volatilities on Man Wah and SEB SA 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 Man Wah with a short position of SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Man Wah and SEB SA.
Diversification Opportunities for Man Wah and SEB SA
Very weak diversification
The 3 months correlation between Man and SEB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Man Wah Holdings and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA and Man Wah 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 Man Wah Holdings are associated (or correlated) with SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Man Wah i.e., Man Wah and SEB SA go up and down completely randomly.
Pair Corralation between Man Wah and SEB SA
Assuming the 90 days horizon Man Wah Holdings is expected to under-perform the SEB SA. In addition to that, Man Wah is 2.2 times more volatile than SEB SA. It trades about -0.04 of its total potential returns per unit of risk. SEB SA is currently generating about -0.07 per unit of volatility. If you would invest 12,293 in SEB SA on September 3, 2024 and sell it today you would lose (2,777) from holding SEB SA or give up 22.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Man Wah Holdings vs. SEB SA
Performance |
| Timeline |
| Man Wah Holdings |
| SEB SA |
Man Wah and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Man Wah and SEB SA
The main advantage of trading using opposite Man Wah and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Man Wah position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.The idea behind Man Wah Holdings and SEB SA 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.| SEB SA vs. Verde Clean Fuels | SEB SA vs. Skillful Craftsman Education | SEB SA vs. Nexstar Broadcasting Group | SEB SA vs. Mesa Air Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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