Correlation Between Whirlpool and Man Wah

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

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

Diversification Opportunities for Whirlpool and Man Wah

0.55

Correlation Coefficient

Whirlpool  Man Wah

Very weak diversification

The 3 months correlation between Whirlpool and Man is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Whirlpool 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 Whirlpool 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 Whirlpool 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 Whirlpool i.e., Whirlpool and Man Wah go up and down completely randomly.

Pair Corralation between Whirlpool and Man Wah

Considering the 90-day investment horizon Whirlpool is expected to under-perform the Man Wah. In addition to that, Whirlpool is 1.28 times more volatile than Man Wah Holdings. It trades about -0.13 of its total potential returns per unit of risk. Man Wah Holdings is currently generating about -0.14 per unit of volatility. If you would invest  1,449  in Man Wah Holdings on January 26, 2024 and sell it today you would lose (69.00) from holding Man Wah Holdings or give up 4.76% of portfolio value over 90 days.

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

Whirlpool  vs.  Man Wah Holdings

Whirlpool

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whirlpool has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Man Wah Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Man Wah Holdings are ranked lower than 5 (%) 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.

Pair Trading with Whirlpool and Man Wah

The main advantage of trading using opposite Whirlpool and Man Wah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whirlpool 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 Whirlpool 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.