Correlation Between Wha Yu and Chailease Holding

Can any of the company-specific risk be diversified away by investing in both Wha Yu and Chailease Holding 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 Wha Yu and Chailease Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wha Yu Industrial and Chailease Holding Co, you can compare the effects of market volatilities on Wha Yu and Chailease Holding 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 Wha Yu with a short position of Chailease Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wha Yu and Chailease Holding.

Diversification Opportunities for Wha Yu and Chailease Holding

0.61

Correlation Coefficient

Wha Yu  Chailease Holding

Poor diversification

The 3 months correlation between Wha and Chailease is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wha Yu Industrial and Chailease Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chailease Holding and Wha Yu 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 Wha Yu Industrial are associated (or correlated) with Chailease Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chailease Holding has no effect on the direction of Wha Yu i.e., Wha Yu and Chailease Holding go up and down completely randomly.

Pair Corralation between Wha Yu and Chailease Holding

Assuming the 90 days trading horizon Wha Yu is expected to generate 1.04 times less return on investment than Chailease Holding. But when comparing it to its historical volatility, Wha Yu Industrial is 1.31 times less risky than Chailease Holding. It trades about 0.24 of its potential returns per unit of risk. Chailease Holding Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  12,000  in Chailease Holding Co on December 5, 2024 and sell it today you would earn a total of  800.00  from holding Chailease Holding Co or generate 6.67% return on investment over 90 days.

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

Wha Yu Industrial  vs.  Chailease Holding Co

Wha Yu Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wha Yu Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wha Yu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chailease Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chailease Holding Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chailease Holding 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 Wha Yu and Chailease Holding

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

The idea behind Wha Yu Industrial and Chailease Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.