Correlation Between Wistron Corp and Sun Max

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

Diversification Opportunities for Wistron Corp and Sun Max

WistronSunDiversified AwayWistronSunDiversified Away100%
0.63
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Wistron Corp and Sun Max

Assuming the 90 days trading horizon Wistron Corp is expected to generate 1.06 times more return on investment than Sun Max. However, Wistron Corp is 1.06 times more volatile than Sun Max Tech. It trades about 0.07 of its potential returns per unit of risk. Sun Max Tech is currently generating about 0.02 per unit of risk. If you would invest  10,300  in Wistron Corp on September 14, 2024 and sell it today you would earn a total of  850.00  from holding Wistron Corp or generate 8.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Wistron Corp  vs.  Sun Max Tech

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 51015202530
JavaScript chart by amCharts 3.21.153231 6591
       Timeline  
Wistron Corp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Wistron Corp are ranked lower than 5 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec100105110115120125
Sun Max Tech 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sun Max Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sun Max is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec49505152535455565758

Wistron Corp and Sun Max Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.65-4.98-3.31-1.640.02981.793.585.377.16 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.153231 6591
       Returns  

Pair Trading with Wistron Corp and Sun Max

The main advantage of trading using opposite Wistron Corp and Sun Max positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Corp position performs unexpectedly, Sun Max 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 Sun Max will offset losses from the drop in Sun Max's long position.
The idea behind Wistron Corp and Sun Max Tech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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