Correlation Between WT Microelectronics and INPAQ Technology

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

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

Diversification Opportunities for WT Microelectronics and INPAQ Technology

-0.76

Correlation Coefficient

WT Microelectronics  INPAQ Technology

Pay attention - limited upside

The 3 months correlation between 3036A and INPAQ is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding WT Microelectronics Co and INPAQ Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INPAQ Technology and WT Microelectronics 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 WT Microelectronics Co are associated (or correlated) with INPAQ Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INPAQ Technology has no effect on the direction of WT Microelectronics i.e., WT Microelectronics and INPAQ Technology go up and down completely randomly.

Pair Corralation between WT Microelectronics and INPAQ Technology

Assuming the 90 days trading horizon WT Microelectronics is expected to generate 7.46 times less return on investment than INPAQ Technology. But when comparing it to its historical volatility, WT Microelectronics Co is 6.32 times less risky than INPAQ Technology. It trades about 0.04 of its potential returns per unit of risk. INPAQ Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,216  in INPAQ Technology Co on October 1, 2024 and sell it today you would earn a total of  2,864  from holding INPAQ Technology Co or generate 54.91% return on investment over 90 days.

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

WT Microelectronics Co  vs.  INPAQ Technology Co

WT Microelectronics

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in WT Microelectronics Co are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WT Microelectronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

INPAQ Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind WT Microelectronics Co and INPAQ Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.