Correlation Between Greatek Electronics and Walsin Technology

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

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

Diversification Opportunities for Greatek Electronics and Walsin Technology

0.36

Correlation Coefficient

Greatek Electronics  Walsin Technology

Weak diversification

The 3 months correlation between Greatek and Walsin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Walsin Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Technology Corp and Greatek 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 Greatek Electronics are associated (or correlated) with Walsin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Technology Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Walsin Technology go up and down completely randomly.

Pair Corralation between Greatek Electronics and Walsin Technology

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 1.48 times less return on investment than Walsin Technology. But when comparing it to its historical volatility, Greatek Electronics is 1.43 times less risky than Walsin Technology. It trades about 0.19 of its potential returns per unit of risk. Walsin Technology Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  9,060  in Walsin Technology Corp on December 5, 2024 and sell it today you would earn a total of  500.00  from holding Walsin Technology Corp or generate 5.52% return on investment over 90 days.

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

Greatek Electronics  vs.  Walsin Technology Corp

Greatek Electronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greatek Electronics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Greatek Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Walsin Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walsin Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Walsin Technology 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 Greatek Electronics and Walsin Technology

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

The idea behind Greatek Electronics and Walsin Technology 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.