Correlation Between Falcon Power and Wan Hai
Can any of the company-specific risk be diversified away by investing in both Falcon Power and Wan Hai 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 Falcon Power and Wan Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Power Co and Wan Hai Lines, you can compare the effects of market volatilities on Falcon Power and Wan Hai 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 Falcon Power with a short position of Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Power and Wan Hai.
Diversification Opportunities for Falcon Power and Wan Hai
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Falcon and Wan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Power Co and Wan Hai Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wan Hai Lines and Falcon Power 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 Falcon Power Co are associated (or correlated) with Wan Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wan Hai Lines has no effect on the direction of Falcon Power i.e., Falcon Power and Wan Hai go up and down completely randomly.
Pair Corralation between Falcon Power and Wan Hai
Assuming the 90 days trading horizon Falcon Power is expected to generate 4.47 times less return on investment than Wan Hai. But when comparing it to its historical volatility, Falcon Power Co is 1.96 times less risky than Wan Hai. It trades about 0.16 of its potential returns per unit of risk. Wan Hai Lines is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 7,320 in Wan Hai Lines on December 5, 2024 and sell it today you would earn a total of 1,140 from holding Wan Hai Lines or generate 15.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Falcon Power Co vs. Wan Hai Lines
Performance |
Timeline |
Falcon Power |
Wan Hai Lines |
Falcon Power and Wan Hai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Falcon Power and Wan Hai
The main advantage of trading using opposite Falcon Power and Wan Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Power position performs unexpectedly, Wan Hai 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 Wan Hai will offset losses from the drop in Wan Hai's long position.Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
Wan Hai vs. Yang Ming Marine | Wan Hai vs. Evergreen Marine Corp | Wan Hai vs. Eva Airways Corp | Wan Hai vs. China Airlines |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |