Correlation Between Wei Chuan and Powertech Industrial
Can any of the company-specific risk be diversified away by investing in both Wei Chuan and Powertech Industrial 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 Wei Chuan and Powertech Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wei Chuan Foods and Powertech Industrial Co, you can compare the effects of market volatilities on Wei Chuan and Powertech Industrial 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 Wei Chuan with a short position of Powertech Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chuan and Powertech Industrial.
Diversification Opportunities for Wei Chuan and Powertech Industrial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wei and Powertech is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chuan Foods and Powertech Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Industrial and Wei Chuan 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 Wei Chuan Foods are associated (or correlated) with Powertech Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Industrial has no effect on the direction of Wei Chuan i.e., Wei Chuan and Powertech Industrial go up and down completely randomly.
Pair Corralation between Wei Chuan and Powertech Industrial
Assuming the 90 days trading horizon Wei Chuan Foods is expected to generate 0.17 times more return on investment than Powertech Industrial. However, Wei Chuan Foods is 5.83 times less risky than Powertech Industrial. It trades about -0.03 of its potential returns per unit of risk. Powertech Industrial Co is currently generating about -0.06 per unit of risk. If you would invest 1,830 in Wei Chuan Foods on December 5, 2024 and sell it today you would lose (20.00) from holding Wei Chuan Foods or give up 1.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Wei Chuan Foods vs. Powertech Industrial Co
Performance |
Timeline |
Wei Chuan Foods |
Powertech Industrial |
Wei Chuan and Powertech Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wei Chuan and Powertech Industrial
The main advantage of trading using opposite Wei Chuan and Powertech Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chuan position performs unexpectedly, Powertech Industrial 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 Powertech Industrial will offset losses from the drop in Powertech Industrial's long position.Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Taisun Enterprise Co | Wei Chuan vs. AGV Products Corp | Wei Chuan vs. Great Wall Enterprise |
Powertech Industrial vs. Leader Electronics | Powertech Industrial vs. Darwin Precisions Corp | Powertech Industrial vs. Silitech Technology Corp | Powertech Industrial vs. Altek Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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