Correlation Between Wholetech System and Shih Kuen

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

By analyzing existing cross correlation between Wholetech System Hitech and Shih Kuen Plastics, you can compare the effects of market volatilities on Wholetech System and Shih Kuen 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 Wholetech System with a short position of Shih Kuen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wholetech System and Shih Kuen.

Diversification Opportunities for Wholetech System and Shih Kuen

0.25

Correlation Coefficient

Wholetech System  Shih Kuen

Modest diversification

The 3 months correlation between Wholetech and Shih is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wholetech System Hitech and Shih Kuen Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shih Kuen Plastics and Wholetech System 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 Wholetech System Hitech are associated (or correlated) with Shih Kuen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shih Kuen Plastics has no effect on the direction of Wholetech System i.e., Wholetech System and Shih Kuen go up and down completely randomly.

Pair Corralation between Wholetech System and Shih Kuen

Assuming the 90 days trading horizon Wholetech System Hitech is expected to generate 1.92 times more return on investment than Shih Kuen. However, Wholetech System is 1.92 times more volatile than Shih Kuen Plastics. It trades about -0.04 of its potential returns per unit of risk. Shih Kuen Plastics is currently generating about -0.14 per unit of risk. If you would invest  10,750  in Wholetech System Hitech on September 22, 2024 and sell it today you would lose (700.00) from holding Wholetech System Hitech or give up 6.51% of portfolio value over 90 days.

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

Wholetech System Hitech  vs.  Shih Kuen Plastics

Wholetech System Hitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wholetech System Hitech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wholetech System is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Shih Kuen Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shih Kuen Plastics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Wholetech System and Shih Kuen

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

The idea behind Wholetech System Hitech and Shih Kuen Plastics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.