Correlation Between Flexsteel Industries and Man Wah

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

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

Diversification Opportunities for Flexsteel Industries and Man Wah

0.37

Correlation Coefficient

Flexsteel Industries  Man Wah

Weak diversification

The 3 months correlation between Flexsteel and Man is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Flexsteel Industries and Man Wah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Wah Holdings and Flexsteel Industries 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 Flexsteel Industries are associated (or correlated) with Man Wah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Wah Holdings has no effect on the direction of Flexsteel Industries i.e., Flexsteel Industries and Man Wah go up and down completely randomly.

Pair Corralation between Flexsteel Industries and Man Wah

Given the investment horizon of 90 days Flexsteel Industries is expected to under-perform the Man Wah. In addition to that, Flexsteel Industries is 2.53 times more volatile than Man Wah Holdings. It trades about -0.05 of its total potential returns per unit of risk. Man Wah Holdings is currently generating about 0.0 per unit of volatility. If you would invest  1,209  in Man Wah Holdings on December 1, 2024 and sell it today you would lose (12.00) from holding Man Wah Holdings or give up 0.99% of portfolio value over 90 days.

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

Flexsteel Industries  vs.  Man Wah Holdings

Flexsteel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flexsteel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Man Wah Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Man Wah Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Man Wah is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Flexsteel Industries and Man Wah

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

The idea behind Flexsteel Industries and Man Wah Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.