Correlation Between Wan Hai and Hiwin Technologies

Can any of the company-specific risk be diversified away by investing in both Wan Hai and Hiwin Technologies 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 Hiwin Technologies 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 Hiwin Technologies Corp, you can compare the effects of market volatilities on Wan Hai and Hiwin Technologies 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 Hiwin Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and Hiwin Technologies.

Diversification Opportunities for Wan Hai and Hiwin Technologies

0.02

Correlation Coefficient

Wan Hai  Hiwin Technologies

Significant diversification

The 3 months correlation between Wan and Hiwin is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies Corp 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 Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of Wan Hai i.e., Wan Hai and Hiwin Technologies go up and down completely randomly.

Pair Corralation between Wan Hai and Hiwin Technologies

Assuming the 90 days trading horizon Wan Hai Lines is expected to generate 0.49 times more return on investment than Hiwin Technologies. However, Wan Hai Lines is 2.02 times less risky than Hiwin Technologies. It trades about 0.38 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.08 per unit of risk. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wan Hai Lines  vs.  Hiwin Technologies Corp

Wan Hai Lines

Risk-Adjusted Performance

Very 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.

Hiwin Technologies Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Technologies Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wan Hai and Hiwin Technologies

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

The idea behind Wan Hai Lines and Hiwin Technologies Corp 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.