Correlation Between Wistron Corp and Acer

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

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

Diversification Opportunities for Wistron Corp and Acer

-0.6

Correlation Coefficient

Wistron Corp  Acer

Excellent diversification

The 3 months correlation between Wistron and Acer is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Corp and Acer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer Inc and Wistron Corp 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 Wistron Corp are associated (or correlated) with Acer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer Inc has no effect on the direction of Wistron Corp i.e., Wistron Corp and Acer go up and down completely randomly.

Pair Corralation between Wistron Corp and Acer

Assuming the 90 days trading horizon Wistron Corp is expected to generate 1.43 times more return on investment than Acer. However, Wistron Corp is 1.43 times more volatile than Acer Inc. It trades about 0.15 of its potential returns per unit of risk. Acer Inc is currently generating about -0.07 per unit of risk. If you would invest  9,400  in Wistron Corp on September 4, 2024 and sell it today you would earn a total of  2,100  from holding Wistron Corp or generate 22.34% return on investment over 90 days.

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

Wistron Corp  vs.  Acer Inc

Wistron Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wistron Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wistron Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Acer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acer Inc 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.

Pair Trading with Wistron Corp and Acer

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

The idea behind Wistron Corp and Acer Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.