Correlation Between Walsin Technology and XAC Automation

Can any of the company-specific risk be diversified away by investing in both Walsin Technology and XAC Automation 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 XAC Automation 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 XAC Automation, you can compare the effects of market volatilities on Walsin Technology and XAC Automation 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 XAC Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Technology and XAC Automation.

Diversification Opportunities for Walsin Technology and XAC Automation

0.24

Correlation Coefficient

Walsin Technology  XAC Automation

Modest diversification

The 3 months correlation between Walsin and XAC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Technology Corp and XAC Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAC Automation 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 XAC Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAC Automation has no effect on the direction of Walsin Technology i.e., Walsin Technology and XAC Automation go up and down completely randomly.

Pair Corralation between Walsin Technology and XAC Automation

Assuming the 90 days trading horizon Walsin Technology Corp is expected to generate 0.55 times more return on investment than XAC Automation. However, Walsin Technology Corp is 1.8 times less risky than XAC Automation. It trades about -0.11 of its potential returns per unit of risk. XAC Automation is currently generating about -0.11 per unit of risk. If you would invest  9,700  in Walsin Technology Corp on October 11, 2024 and sell it today you would lose (300.00) from holding Walsin Technology Corp or give up 3.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Walsin Technology Corp  vs.  XAC Automation

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.

XAC Automation

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Walsin Technology Corp and XAC Automation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.