Correlation Between WT Microelectronics and Hotai Finance
Can any of the company-specific risk be diversified away by investing in both WT Microelectronics and Hotai Finance 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 Hotai Finance 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 Hotai Finance Corp, you can compare the effects of market volatilities on WT Microelectronics and Hotai Finance 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 Hotai Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Microelectronics and Hotai Finance.
Diversification Opportunities for WT Microelectronics and Hotai Finance
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 3036A and Hotai is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding WT Microelectronics Co and Hotai Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Finance Corp 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 Hotai Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Finance Corp has no effect on the direction of WT Microelectronics i.e., WT Microelectronics and Hotai Finance go up and down completely randomly.
Pair Corralation between WT Microelectronics and Hotai Finance
Assuming the 90 days trading horizon WT Microelectronics is expected to generate 15.31 times less return on investment than Hotai Finance. But when comparing it to its historical volatility, WT Microelectronics Co is 25.96 times less risky than Hotai Finance. It trades about 0.05 of its potential returns per unit of risk. Hotai Finance Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 8,036 in Hotai Finance Corp on September 29, 2024 and sell it today you would lose (266.00) from holding Hotai Finance Corp or give up 3.31% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 99.79% |
Values | Daily Returns |
WT Microelectronics Co vs. Hotai Finance Corp
Performance |
Timeline |
WT Microelectronics |
Hotai Finance Corp |
WT Microelectronics and Hotai Finance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WT Microelectronics and Hotai Finance
The main advantage of trading using opposite WT Microelectronics and Hotai Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Microelectronics position performs unexpectedly, Hotai Finance 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 Hotai Finance will offset losses from the drop in Hotai Finance's long position.WT Microelectronics vs. Taiwan Semiconductor Manufacturing | WT Microelectronics vs. MediaTek | WT Microelectronics vs. United Microelectronics | WT Microelectronics vs. Novatek Microelectronics Corp |
Hotai Finance vs. Chailease Holding Co | Hotai Finance vs. Yulon Finance Corp | Hotai Finance vs. Pou Chen Corp | Hotai Finance vs. Ruentex Industries |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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