Correlation Between Run Long and Wan Hai

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Can any of the company-specific risk be diversified away by investing in both Run Long 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 Run Long and Wan Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Run Long Construction and Wan Hai Lines, you can compare the effects of market volatilities on Run Long 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 Run Long with a short position of Wan Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Run Long and Wan Hai.

Diversification Opportunities for Run Long and Wan Hai

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Run and Wan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Run Long Construction 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 Run Long 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 Run Long Construction 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 Run Long i.e., Run Long and Wan Hai go up and down completely randomly.

Pair Corralation between Run Long and Wan Hai

Assuming the 90 days trading horizon Run Long Construction is expected to generate 0.55 times more return on investment than Wan Hai. However, Run Long Construction is 1.81 times less risky than Wan Hai. It trades about -0.28 of its potential returns per unit of risk. Wan Hai Lines is currently generating about -0.19 per unit of risk. If you would invest  4,045  in Run Long Construction on September 19, 2024 and sell it today you would lose (310.00) from holding Run Long Construction or give up 7.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Run Long Construction  vs.  Wan Hai Lines

 Performance 
       Timeline  
Run Long Construction 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Run Long Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Wan Hai Lines 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Wan Hai Lines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Wan Hai is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Run Long and Wan Hai Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Run Long and Wan Hai

The main advantage of trading using opposite Run Long and Wan Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Run Long 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.
The idea behind Run Long Construction and Wan Hai Lines 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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