Correlation Between Asia Seed and Wing Yip

Can any of the company-specific risk be diversified away by investing in both Asia Seed and Wing Yip 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 Asia Seed and Wing Yip into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Seed CoLtd and Wing Yip Food, you can compare the effects of market volatilities on Asia Seed and Wing Yip 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 Asia Seed with a short position of Wing Yip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Seed and Wing Yip.

Diversification Opportunities for Asia Seed and Wing Yip

-0.26

Correlation Coefficient

Asia Seed  Wing Yip

Very good diversification

The 3 months correlation between Asia and Wing is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Asia Seed CoLtd and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food and Asia Seed 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 Asia Seed CoLtd are associated (or correlated) with Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of Asia Seed i.e., Asia Seed and Wing Yip go up and down completely randomly.

Pair Corralation between Asia Seed and Wing Yip

Assuming the 90 days trading horizon Asia Seed CoLtd is expected to generate 2.02 times more return on investment than Wing Yip. However, Asia Seed is 2.02 times more volatile than Wing Yip Food. It trades about 0.13 of its potential returns per unit of risk. Wing Yip Food is currently generating about 0.01 per unit of risk. If you would invest  194,600  in Asia Seed CoLtd on December 31, 2024 and sell it today you would earn a total of  61,400  from holding Asia Seed CoLtd or generate 31.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Asia Seed CoLtd  vs.  Wing Yip Food

Asia Seed CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Seed CoLtd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Asia Seed sustained solid returns over the last few months and may actually be approaching a breakup point.

Wing Yip Food

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wing Yip Food are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wing Yip is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Asia Seed and Wing Yip

The main advantage of trading using opposite Asia Seed and Wing Yip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Seed position performs unexpectedly, Wing Yip 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 Wing Yip will offset losses from the drop in Wing Yip's long position.

The idea behind Asia Seed CoLtd and Wing Yip Food pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.