Correlation Between Walsin Technology and GlobalWafers

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

Diversification Opportunities for Walsin Technology and GlobalWafers

0.19

Correlation Coefficient

Walsin Technology  GlobalWafers

Average diversification

The 3 months correlation between Walsin and GlobalWafers is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Technology Corp and GlobalWafers Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalWafers 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 GlobalWafers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalWafers has no effect on the direction of Walsin Technology i.e., Walsin Technology and GlobalWafers go up and down completely randomly.

Pair Corralation between Walsin Technology and GlobalWafers

Assuming the 90 days trading horizon Walsin Technology Corp is expected to generate 0.65 times more return on investment than GlobalWafers. However, Walsin Technology Corp is 1.55 times less risky than GlobalWafers. It trades about 0.03 of its potential returns per unit of risk. GlobalWafers Co is currently generating about 0.0 per unit of risk. If you would invest  9,430  in Walsin Technology Corp on December 26, 2024 and sell it today you would earn a total of  150.00  from holding Walsin Technology Corp or generate 1.59% return on investment over 90 days.

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

Walsin Technology Corp  vs.  GlobalWafers Co

Walsin Technology Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walsin Technology Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

GlobalWafers

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Walsin Technology Corp and GlobalWafers Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.