Correlation Between Acer and Wistron Corp
Can any of the company-specific risk be diversified away by investing in both Acer and Wistron 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 Acer and Wistron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acer Inc and Wistron Corp, you can compare the effects of market volatilities on Acer and Wistron 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 Acer with a short position of Wistron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acer and Wistron Corp.
Diversification Opportunities for Acer and Wistron Corp
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Acer and Wistron is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Acer Inc and Wistron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Corp and Acer 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 Acer Inc are associated (or correlated) with Wistron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Corp has no effect on the direction of Acer i.e., Acer and Wistron Corp go up and down completely randomly.
Pair Corralation between Acer and Wistron Corp
Assuming the 90 days trading horizon Acer Inc is expected to under-perform the Wistron Corp. But the stock apears to be less risky and, when comparing its historical volatility, Acer Inc is 1.69 times less risky than Wistron Corp. The stock trades about -0.05 of its potential returns per unit of risk. The Wistron Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 10,400 in Wistron Corp on December 30, 2024 and sell it today you would lose (350.00) from holding Wistron Corp or give up 3.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Acer Inc vs. Wistron Corp
Performance |
Timeline |
Acer Inc |
Wistron Corp |
Acer and Wistron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Acer and Wistron Corp
The main advantage of trading using opposite Acer and Wistron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acer position performs unexpectedly, Wistron 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 Wistron Corp will offset losses from the drop in Wistron Corp's long position.The idea behind Acer Inc and Wistron 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.Wistron Corp vs. Pegatron Corp | Wistron Corp vs. Quanta Computer | Wistron Corp vs. Compal Electronics | Wistron Corp vs. Inventec 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data |