Correlation Between Wan Hai and Acer E

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

Diversification Opportunities for Wan Hai and Acer E

-0.52

Correlation Coefficient

Wan Hai  Acer E

Excellent diversification

The 3 months correlation between Wan and Acer is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and Acer E Enabling Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer E Enabling 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 Acer E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer E Enabling has no effect on the direction of Wan Hai i.e., Wan Hai and Acer E go up and down completely randomly.

Pair Corralation between Wan Hai and Acer E

Assuming the 90 days trading horizon Wan Hai is expected to generate 5.3 times less return on investment than Acer E. But when comparing it to its historical volatility, Wan Hai Lines is 1.16 times less risky than Acer E. It trades about 0.01 of its potential returns per unit of risk. Acer E Enabling Service is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  13,413  in Acer E Enabling Service on October 23, 2024 and sell it today you would earn a total of  12,687  from holding Acer E Enabling Service or generate 94.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Wan Hai Lines  vs.  Acer E Enabling Service

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Acer E Enabling

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acer E Enabling Service are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Acer E is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Wan Hai and Acer E

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

The idea behind Wan Hai Lines and Acer E Enabling Service 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.