Correlation Between Man Wah and H FARM

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

Diversification Opportunities for Man Wah and H FARM

0.27

Correlation Coefficient

Man Wah  H FARM

Modest diversification

The 3 months correlation between Man and 5JQ is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Man Wah Holdings and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA 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 H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of Man Wah i.e., Man Wah and H FARM go up and down completely randomly.

Pair Corralation between Man Wah and H FARM

Assuming the 90 days horizon Man Wah Holdings is expected to generate 1.82 times more return on investment than H FARM. However, Man Wah is 1.82 times more volatile than H FARM SPA. It trades about 0.25 of its potential returns per unit of risk. H FARM SPA is currently generating about 0.12 per unit of risk. If you would invest  40.00  in Man Wah Holdings on September 29, 2024 and sell it today you would earn a total of  17.00  from holding Man Wah Holdings or generate 42.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Man Wah Holdings  vs.  H FARM SPA

Man Wah Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Man Wah Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Man Wah reported solid returns over the last few months and may actually be approaching a breakup point.

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Man Wah and H FARM

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

The idea behind Man Wah Holdings and H FARM SPA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.