Correlation Between Oceanic Beverages and Wistron NeWeb

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

By analyzing existing cross correlation between Oceanic Beverages Co and Wistron NeWeb Corp, you can compare the effects of market volatilities on Oceanic Beverages and Wistron NeWeb 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 Oceanic Beverages with a short position of Wistron NeWeb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Beverages and Wistron NeWeb.

Diversification Opportunities for Oceanic Beverages and Wistron NeWeb

-0.01

Correlation Coefficient

Oceanic Beverages  Wistron NeWeb

Good diversification

The 3 months correlation between Oceanic and Wistron is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Beverages Co and Wistron NeWeb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron NeWeb Corp and Oceanic Beverages 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 Oceanic Beverages Co are associated (or correlated) with Wistron NeWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron NeWeb Corp has no effect on the direction of Oceanic Beverages i.e., Oceanic Beverages and Wistron NeWeb go up and down completely randomly.

Pair Corralation between Oceanic Beverages and Wistron NeWeb

Assuming the 90 days trading horizon Oceanic Beverages is expected to generate 1.3 times less return on investment than Wistron NeWeb. In addition to that, Oceanic Beverages is 1.38 times more volatile than Wistron NeWeb Corp. It trades about 0.11 of its total potential returns per unit of risk. Wistron NeWeb Corp is currently generating about 0.19 per unit of volatility. If you would invest  11,100  in Wistron NeWeb Corp on September 17, 2024 and sell it today you would earn a total of  750.00  from holding Wistron NeWeb Corp or generate 6.76% return on investment over 90 days.

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

Oceanic Beverages Co  vs.  Wistron NeWeb Corp

Oceanic Beverages

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oceanic Beverages Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oceanic Beverages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Wistron NeWeb Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wistron NeWeb Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Wistron NeWeb is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Oceanic Beverages and Wistron NeWeb

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

The idea behind Oceanic Beverages Co and Wistron NeWeb Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.