Correlation Between Richardson Electronics and Wenzhou Kangning
Can any of the company-specific risk be diversified away by investing in both Richardson Electronics and Wenzhou Kangning 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 Richardson Electronics and Wenzhou Kangning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richardson Electronics and Wenzhou Kangning Hospital, you can compare the effects of market volatilities on Richardson Electronics and Wenzhou Kangning 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 Richardson Electronics with a short position of Wenzhou Kangning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richardson Electronics and Wenzhou Kangning.
Diversification Opportunities for Richardson Electronics and Wenzhou Kangning
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Richardson and Wenzhou is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and Wenzhou Kangning Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wenzhou Kangning Hospital and Richardson Electronics 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 Richardson Electronics are associated (or correlated) with Wenzhou Kangning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wenzhou Kangning Hospital has no effect on the direction of Richardson Electronics i.e., Richardson Electronics and Wenzhou Kangning go up and down completely randomly.
Pair Corralation between Richardson Electronics and Wenzhou Kangning
Assuming the 90 days horizon Richardson Electronics is expected to generate 1.29 times more return on investment than Wenzhou Kangning. However, Richardson Electronics is 1.29 times more volatile than Wenzhou Kangning Hospital. It trades about 0.1 of its potential returns per unit of risk. Wenzhou Kangning Hospital is currently generating about -0.24 per unit of risk. If you would invest 1,348 in Richardson Electronics on October 11, 2024 and sell it today you would earn a total of 43.00 from holding Richardson Electronics or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Richardson Electronics vs. Wenzhou Kangning Hospital
Performance |
| Timeline |
| Richardson Electronics |
| Wenzhou Kangning Hospital |
Richardson Electronics and Wenzhou Kangning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richardson Electronics and Wenzhou Kangning
The main advantage of trading using opposite Richardson Electronics and Wenzhou Kangning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics position performs unexpectedly, Wenzhou Kangning 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 Wenzhou Kangning will offset losses from the drop in Wenzhou Kangning's long position.| Richardson Electronics vs. NURAN WIRELESS INC | Richardson Electronics vs. JLF INVESTMENT | Richardson Electronics vs. CHRYSALIS INVESTMENTS LTD | Richardson Electronics vs. PennantPark Investment |
| Wenzhou Kangning vs. WT OFFSHORE | Wenzhou Kangning vs. Richardson Electronics | Wenzhou Kangning vs. STORE ELECTRONIC | Wenzhou Kangning vs. Eidesvik Offshore ASA |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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