Correlation Between Wistron Corp and Ma Kuang

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Can any of the company-specific risk be diversified away by investing in both Wistron Corp and Ma Kuang 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 Ma Kuang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wistron Corp and Ma Kuang Healthcare, you can compare the effects of market volatilities on Wistron Corp and Ma Kuang 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 Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Corp and Ma Kuang.

Diversification Opportunities for Wistron Corp and Ma Kuang

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Wistron and 4139 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Corp and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare 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 Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of Wistron Corp i.e., Wistron Corp and Ma Kuang go up and down completely randomly.

Pair Corralation between Wistron Corp and Ma Kuang

Assuming the 90 days trading horizon Wistron Corp is expected to generate 4.29 times less return on investment than Ma Kuang. But when comparing it to its historical volatility, Wistron Corp is 1.03 times less risky than Ma Kuang. It trades about 0.01 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,020  in Ma Kuang Healthcare on September 29, 2024 and sell it today you would earn a total of  295.00  from holding Ma Kuang Healthcare or generate 9.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Wistron Corp  vs.  Ma Kuang Healthcare

 Performance 
       Timeline  
Wistron Corp 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Wistron Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wistron Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Ma Kuang Healthcare 

Risk-Adjusted Performance

1 of 100

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

Wistron Corp and Ma Kuang Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wistron Corp and Ma Kuang

The main advantage of trading using opposite Wistron Corp and Ma Kuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Corp position performs unexpectedly, Ma Kuang 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 Ma Kuang will offset losses from the drop in Ma Kuang's long position.
The idea behind Wistron Corp and Ma Kuang Healthcare 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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