Correlation Between WH Group and China Feihe
Can any of the company-specific risk be diversified away by investing in both WH Group and China Feihe 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 WH Group and China Feihe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WH Group Limited and China Feihe Limited, you can compare the effects of market volatilities on WH Group and China Feihe 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 WH Group with a short position of China Feihe. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and China Feihe.
Diversification Opportunities for WH Group and China Feihe
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WHGRF and China is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and China Feihe Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Feihe Limited and WH Group 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 WH Group Limited are associated (or correlated) with China Feihe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Feihe Limited has no effect on the direction of WH Group i.e., WH Group and China Feihe go up and down completely randomly.
Pair Corralation between WH Group and China Feihe
Assuming the 90 days horizon WH Group is expected to generate 5.77 times less return on investment than China Feihe. But when comparing it to its historical volatility, WH Group Limited is 8.46 times less risky than China Feihe. It trades about 0.13 of its potential returns per unit of risk. China Feihe Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 41.00 in China Feihe Limited on October 24, 2024 and sell it today you would earn a total of 21.00 from holding China Feihe Limited or generate 51.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.47% |
| Values | Daily Returns |
WH Group Limited vs. China Feihe Limited
Performance |
| Timeline |
| WH Group Limited |
| China Feihe Limited |
WH Group and China Feihe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and China Feihe
The main advantage of trading using opposite WH Group and China Feihe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group position performs unexpectedly, China Feihe 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 China Feihe will offset losses from the drop in China Feihe's long position.| WH Group vs. Premier Foods Plc | WH Group vs. Torque Lifestyle Brands | WH Group vs. Naturally Splendid Enterprises | WH Group vs. Aryzta AG PK |
| China Feihe vs. WH Group Limited | China Feihe vs. BG Foods | China Feihe vs. JBS SA | China Feihe vs. Marfrig Global Foods |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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