Correlation Between Walsin Technology and Edison Opto

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

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

Diversification Opportunities for Walsin Technology and Edison Opto

0.62

Correlation Coefficient

Walsin Technology  Edison Opto

Poor diversification

The 3 months correlation between Walsin and Edison is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Technology Corp and Edison Opto Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison Opto Corp and Walsin Technology 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 Walsin Technology Corp are associated (or correlated) with Edison Opto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison Opto Corp has no effect on the direction of Walsin Technology i.e., Walsin Technology and Edison Opto go up and down completely randomly.

Pair Corralation between Walsin Technology and Edison Opto

Assuming the 90 days trading horizon Walsin Technology is expected to generate 2.2 times less return on investment than Edison Opto. In addition to that, Walsin Technology is 1.02 times more volatile than Edison Opto Corp. It trades about 0.02 of its total potential returns per unit of risk. Edison Opto Corp is currently generating about 0.04 per unit of volatility. If you would invest  1,780  in Edison Opto Corp on October 10, 2024 and sell it today you would earn a total of  740.00  from holding Edison Opto Corp or generate 41.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Walsin Technology Corp  vs.  Edison Opto Corp

Walsin Technology Corp

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Edison Opto Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edison Opto Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Walsin Technology and Edison Opto

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

The idea behind Walsin Technology Corp and Edison Opto 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.