Correlation Between Bright Led and Wistron NeWeb

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

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

Diversification Opportunities for Bright Led and Wistron NeWeb

0.44

Correlation Coefficient

Bright Led  Wistron NeWeb

Very weak diversification

The 3 months correlation between Bright and Wistron is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bright Led Electronics and Wistron NeWeb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron NeWeb Corp and Bright Led 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 Bright Led Electronics are associated (or correlated) with Wistron NeWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron NeWeb Corp has no effect on the direction of Bright Led i.e., Bright Led and Wistron NeWeb go up and down completely randomly.

Pair Corralation between Bright Led and Wistron NeWeb

Assuming the 90 days trading horizon Bright Led is expected to generate 4.06 times less return on investment than Wistron NeWeb. But when comparing it to its historical volatility, Bright Led Electronics is 1.02 times less risky than Wistron NeWeb. It trades about 0.02 of its potential returns per unit of risk. Wistron NeWeb Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13,700  in Wistron NeWeb Corp on December 25, 2024 and sell it today you would earn a total of  1,650  from holding Wistron NeWeb Corp or generate 12.04% return on investment over 90 days.

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

Bright Led Electronics  vs.  Wistron NeWeb Corp

Bright Led Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Led Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Bright Led is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Wistron NeWeb Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wistron NeWeb Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wistron NeWeb showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bright Led and Wistron NeWeb

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

The idea behind Bright Led Electronics and Wistron NeWeb 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.