Correlation Between Wan Hai and Acter

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

Diversification Opportunities for Wan Hai and Acter

-0.26

Correlation Coefficient

Wan Hai  Acter

Very good diversification

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

Pair Corralation between Wan Hai and Acter

Assuming the 90 days trading horizon Wan Hai is expected to generate 4.03 times less return on investment than Acter. In addition to that, Wan Hai is 1.46 times more volatile than Acter Co. It trades about 0.01 of its total potential returns per unit of risk. Acter Co is currently generating about 0.07 per unit of volatility. If you would invest  32,250  in Acter Co on September 18, 2024 and sell it today you would earn a total of  3,100  from holding Acter Co or generate 9.61% return on investment over 90 days.

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

Wan Hai Lines  vs.  Acter Co

Wan Hai Lines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wan Hai Lines has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Acter

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acter Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acter may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wan Hai and Acter

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

The idea behind Wan Hai Lines and Acter Co 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .