Correlation Between Wharf Holdings and Bayport International
Can any of the company-specific risk be diversified away by investing in both Wharf Holdings and Bayport International 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 Wharf Holdings and Bayport International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wharf Holdings and Bayport International Holdings, you can compare the effects of market volatilities on Wharf Holdings and Bayport International 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 Wharf Holdings with a short position of Bayport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wharf Holdings and Bayport International.
Diversification Opportunities for Wharf Holdings and Bayport International
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wharf and Bayport is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Wharf Holdings and Bayport International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayport International and Wharf Holdings 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 Wharf Holdings are associated (or correlated) with Bayport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayport International has no effect on the direction of Wharf Holdings i.e., Wharf Holdings and Bayport International go up and down completely randomly.
Pair Corralation between Wharf Holdings and Bayport International
Assuming the 90 days horizon Wharf Holdings is expected to generate 113.1 times less return on investment than Bayport International. But when comparing it to its historical volatility, Wharf Holdings is 27.16 times less risky than Bayport International. It trades about 0.02 of its potential returns per unit of risk. Bayport International Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Bayport International Holdings on November 2, 2024 and sell it today you would lose (0.79) from holding Bayport International Holdings or give up 98.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.95% |
| Values | Daily Returns |
Wharf Holdings vs. Bayport International Holdings
Performance |
| Timeline |
| Wharf Holdings |
| Bayport International |
Wharf Holdings and Bayport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wharf Holdings and Bayport International
The main advantage of trading using opposite Wharf Holdings and Bayport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wharf Holdings position performs unexpectedly, Bayport International 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 Bayport International will offset losses from the drop in Bayport International's long position.| Wharf Holdings vs. Sino Land Co | Wharf Holdings vs. Hong Kong Land | Wharf Holdings vs. Holiday Island Holdings | Wharf Holdings vs. Sun Hung Kai |
| Bayport International vs. Hong Kong Land | Bayport International vs. Wharf Holdings | Bayport International vs. Holiday Island Holdings | Bayport International vs. Sun Hung Kai |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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