Correlation Between MasterBrand and Man Wah

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

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

Diversification Opportunities for MasterBrand and Man Wah

0.46

Correlation Coefficient

MasterBrand  Man Wah

Very weak diversification

The 3 months correlation between MasterBrand and Man is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MasterBrand 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 MasterBrand 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 MasterBrand 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 MasterBrand i.e., MasterBrand and Man Wah go up and down completely randomly.

Pair Corralation between MasterBrand and Man Wah

Considering the 90-day investment horizon MasterBrand is expected to generate 0.54 times more return on investment than Man Wah. However, MasterBrand is 1.85 times less risky than Man Wah. It trades about -0.07 of its potential returns per unit of risk. Man Wah Holdings is currently generating about -0.33 per unit of risk. If you would invest  1,796  in MasterBrand on September 1, 2024 and sell it today you would lose (66.00) from holding MasterBrand or give up 3.67% of portfolio value over 90 days.

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

MasterBrand  vs.  Man Wah Holdings

MasterBrand

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MasterBrand are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, MasterBrand may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Man Wah Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Man Wah Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, Man Wah showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MasterBrand and Man Wah

The main advantage of trading using opposite MasterBrand and Man Wah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MasterBrand 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 MasterBrand 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.