Correlation Between Wan Hai and Taiwan Glass
Can any of the company-specific risk be diversified away by investing in both Wan Hai and Taiwan Glass 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 Wan Hai and Taiwan Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wan Hai Lines and Taiwan Glass Ind, you can compare the effects of market volatilities on Wan Hai and Taiwan Glass 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 Wan Hai with a short position of Taiwan Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Taiwan Glass.
Diversification Opportunities for Wan Hai and Taiwan Glass
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wan and Taiwan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Taiwan Glass Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Glass Ind and Wan Hai 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 Wan Hai Lines are associated (or correlated) with Taiwan Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Glass Ind has no effect on the direction of Wan Hai i.e., Wan Hai and Taiwan Glass go up and down completely randomly.
Pair Corralation between Wan Hai and Taiwan Glass
Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 0.73 times more return on investment than Taiwan Glass. However, Wan Hai Lines is 1.38 times less risky than Taiwan Glass. It trades about 0.4 of its potential returns per unit of risk. Taiwan Glass Ind is currently generating about -0.03 per unit of risk. If you would invest 7,320 in Wan Hai Lines on December 4, 2024 and sell it today you would earn a total of 1,180 from holding Wan Hai Lines or generate 16.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Wan Hai Lines vs. Taiwan Glass Ind
Performance |
Timeline |
Wan Hai Lines |
Taiwan Glass Ind |
Wan Hai and Taiwan Glass Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wan Hai and Taiwan Glass
The main advantage of trading using opposite Wan Hai and Taiwan Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, Taiwan Glass 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 Taiwan Glass will offset losses from the drop in Taiwan Glass' long position.Wan Hai vs. Yang Ming Marine | Wan Hai vs. Evergreen Marine Corp | Wan Hai vs. Eva Airways Corp | Wan Hai vs. China Airlines |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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