Correlation Between Winbond Electronics and Yageo Corp

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

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

Diversification Opportunities for Winbond Electronics and Yageo Corp

0.86

Correlation Coefficient

Winbond Electronics  Yageo Corp

Very poor diversification

The 3 months correlation between Winbond and Yageo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Winbond Electronics Corp and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp and Winbond Electronics 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 Winbond Electronics Corp are associated (or correlated) with Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of Winbond Electronics i.e., Winbond Electronics and Yageo Corp go up and down completely randomly.

Pair Corralation between Winbond Electronics and Yageo Corp

Assuming the 90 days trading horizon Winbond Electronics Corp is expected to under-perform the Yageo Corp. But the stock apears to be less risky and, when comparing its historical volatility, Winbond Electronics Corp is 1.09 times less risky than Yageo Corp. The stock trades about -0.33 of its potential returns per unit of risk. The Yageo Corp is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  61,500  in Yageo Corp on September 16, 2024 and sell it today you would lose (10,000) from holding Yageo Corp or give up 16.26% of portfolio value over 90 days.

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

Winbond Electronics Corp  vs.  Yageo Corp

Winbond Electronics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winbond Electronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Yageo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yageo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Winbond Electronics and Yageo Corp

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

The idea behind Winbond Electronics Corp and Yageo 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..