Correlation Between Asia Vital and Wistron Corp

Can any of the company-specific risk be diversified away by investing in both Asia Vital 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 Asia Vital and Wistron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Asia Vital and Wistron Corp

0.69

Correlation Coefficient

Asia Vital  Wistron Corp

Poor diversification

The 3 months correlation between Asia and Wistron is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Asia Vital Components and Wistron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Corp and Asia Vital 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 Asia Vital Components 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 Asia Vital i.e., Asia Vital and Wistron Corp go up and down completely randomly.

Pair Corralation between Asia Vital and Wistron Corp

Assuming the 90 days trading horizon Asia Vital Components is expected to under-perform the Wistron Corp. In addition to that, Asia Vital is 1.25 times more volatile than Wistron Corp. It trades about -0.05 of its total potential returns per unit of risk. Wistron Corp is currently generating about -0.01 per unit of volatility. If you would invest  11,350  in Wistron Corp on October 26, 2024 and sell it today you would lose (350.00) from holding Wistron Corp or give up 3.08% of portfolio value over 90 days.

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

Asia Vital Components  vs.  Wistron Corp

Asia Vital Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Vital Components 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.

Wistron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Asia Vital and Wistron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Vital 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 Asia Vital Components 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.