Correlation Between Man Wah and CN MODERN

Can any of the company-specific risk be diversified away by investing in both Man Wah and CN MODERN 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 Man Wah and CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Man Wah Holdings and CN MODERN DAIRY, you can compare the effects of market volatilities on Man Wah and CN MODERN 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 Man Wah with a short position of CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Man Wah and CN MODERN.

Diversification Opportunities for Man Wah and CN MODERN

0.69

Correlation Coefficient

Man Wah  CN MODERN

Poor diversification

The 3 months correlation between Man and 07M is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Man Wah Holdings and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY and Man Wah 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 Man Wah Holdings are associated (or correlated) with CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of Man Wah i.e., Man Wah and CN MODERN go up and down completely randomly.

Pair Corralation between Man Wah and CN MODERN

Assuming the 90 days horizon Man Wah Holdings is expected to generate 1.55 times more return on investment than CN MODERN. However, Man Wah is 1.55 times more volatile than CN MODERN DAIRY. It trades about 0.21 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about 0.06 per unit of risk. If you would invest  42.00  in Man Wah Holdings on October 10, 2024 and sell it today you would earn a total of  13.00  from holding Man Wah Holdings or generate 30.95% return on investment over 90 days.

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

Man Wah Holdings  vs.  CN MODERN DAIRY

Man Wah Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Man Wah Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Man Wah reported solid returns over the last few months and may actually be approaching a breakup point.

CN MODERN DAIRY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, CN MODERN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Man Wah and CN MODERN

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

The idea behind Man Wah Holdings and CN MODERN DAIRY 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.