Correlation Between Wha Yu and Thye Ming

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

Diversification Opportunities for Wha Yu and Thye Ming

-0.3

Correlation Coefficient

Wha Yu  Thye Ming

Very good diversification

The 3 months correlation between Wha and Thye is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wha Yu Industrial and Thye Ming Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thye Ming Industrial 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 Thye Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thye Ming Industrial has no effect on the direction of Wha Yu i.e., Wha Yu and Thye Ming go up and down completely randomly.

Pair Corralation between Wha Yu and Thye Ming

Assuming the 90 days trading horizon Wha Yu Industrial is expected to generate 2.33 times more return on investment than Thye Ming. However, Wha Yu is 2.33 times more volatile than Thye Ming Industrial. It trades about 0.06 of its potential returns per unit of risk. Thye Ming Industrial is currently generating about 0.0 per unit of risk. If you would invest  1,780  in Wha Yu Industrial on October 11, 2024 and sell it today you would earn a total of  40.00  from holding Wha Yu Industrial or generate 2.25% return on investment over 90 days.

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

Wha Yu Industrial  vs.  Thye Ming Industrial

Wha Yu Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wha Yu Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wha Yu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Thye Ming Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thye Ming Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Thye Ming 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 Thye Ming

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

The idea behind Wha Yu Industrial and Thye Ming Industrial 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.