Correlation Between Man Wah and MasterBrand

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

Diversification Opportunities for Man Wah and MasterBrand

0.22

Correlation Coefficient

Man Wah  MasterBrand

Modest diversification

The 3 months correlation between Man and MasterBrand is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Man Wah Holdings and MasterBrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasterBrand 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 MasterBrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MasterBrand has no effect on the direction of Man Wah i.e., Man Wah and MasterBrand go up and down completely randomly.

Pair Corralation between Man Wah and MasterBrand

Assuming the 90 days horizon Man Wah Holdings is expected to generate 2.65 times more return on investment than MasterBrand. However, Man Wah is 2.65 times more volatile than MasterBrand. It trades about 0.04 of its potential returns per unit of risk. MasterBrand is currently generating about -0.01 per unit of risk. If you would invest  1,156  in Man Wah Holdings on September 14, 2024 and sell it today you would earn a total of  83.00  from holding Man Wah Holdings or generate 7.18% return on investment over 90 days.

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

Man Wah Holdings  vs.  MasterBrand

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. In spite of fairly conflicting technical indicators, Man Wah showed solid returns over the last few months and may actually be approaching a breakup point.

MasterBrand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MasterBrand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, MasterBrand is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Man Wah and MasterBrand

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

The idea behind Man Wah Holdings and MasterBrand 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.