Correlation Between Hsing Ta and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Hsing Ta and Wei Chuan 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 Hsing Ta and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsing Ta Cement and Wei Chuan Foods, you can compare the effects of market volatilities on Hsing Ta and Wei Chuan 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 Hsing Ta with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and Wei Chuan.
Diversification Opportunities for Hsing Ta and Wei Chuan
Poor diversification
The 3 months correlation between Hsing and Wei is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and Hsing Ta 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 Hsing Ta Cement are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Hsing Ta i.e., Hsing Ta and Wei Chuan go up and down completely randomly.
Pair Corralation between Hsing Ta and Wei Chuan
Assuming the 90 days trading horizon Hsing Ta Cement is expected to under-perform the Wei Chuan. In addition to that, Hsing Ta is 1.09 times more volatile than Wei Chuan Foods. It trades about -0.08 of its total potential returns per unit of risk. Wei Chuan Foods is currently generating about -0.05 per unit of volatility. If you would invest 1,830 in Wei Chuan Foods on December 4, 2024 and sell it today you would lose (30.00) from holding Wei Chuan Foods or give up 1.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hsing Ta Cement vs. Wei Chuan Foods
Performance |
Timeline |
Hsing Ta Cement |
Wei Chuan Foods |
Hsing Ta and Wei Chuan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hsing Ta and Wei Chuan
The main advantage of trading using opposite Hsing Ta and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsing Ta position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.Hsing Ta vs. Universal Cement Corp | Hsing Ta vs. Chia Hsin Cement | Hsing Ta vs. AGV Products Corp | Hsing Ta vs. Grand Pacific Petrochemical |
Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Taisun Enterprise Co | Wei Chuan vs. AGV Products Corp | Wei Chuan vs. Great Wall Enterprise |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Bonds Directory Find actively traded corporate debentures issued by US companies |