Correlation Between WH Group and FIT Hon
Can any of the company-specific risk be diversified away by investing in both WH Group and FIT Hon 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 FIT Hon 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 FIT Hon Teng, you can compare the effects of market volatilities on WH Group and FIT Hon 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 FIT Hon. Check out your portfolio center. Please also check ongoing floating volatility patterns of WH Group and FIT Hon.
Diversification Opportunities for WH Group and FIT Hon
Poor diversification
The 3 months correlation between WHGRF and FIT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WH Group Limited and FIT Hon Teng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT Hon Teng 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 FIT Hon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT Hon Teng has no effect on the direction of WH Group i.e., WH Group and FIT Hon go up and down completely randomly.
Pair Corralation between WH Group and FIT Hon
Assuming the 90 days horizon WH Group Limited is expected to generate 5.5 times more return on investment than FIT Hon. However, WH Group is 5.5 times more volatile than FIT Hon Teng. It trades about 0.17 of its potential returns per unit of risk. FIT Hon Teng is currently generating about 0.05 per unit of risk. If you would invest 19.00 in WH Group Limited on August 27, 2024 and sell it today you would earn a total of 60.00 from holding WH Group Limited or generate 315.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 62.42% |
| Values | Daily Returns |
WH Group Limited vs. FIT Hon Teng
Performance |
| Timeline |
| WH Group Limited |
| FIT Hon Teng |
WH Group and FIT Hon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WH Group and FIT Hon
The main advantage of trading using opposite WH Group and FIT Hon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WH Group position performs unexpectedly, FIT Hon 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 FIT Hon will offset losses from the drop in FIT Hon'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 |
| FIT Hon vs. KULR Technology Group | FIT Hon vs. Ouster Inc | FIT Hon vs. MicroCloud Hologram | FIT Hon vs. Kopin |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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