Correlation Between Adata Technology and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Adata Technology and Wei Chuan 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 Adata Technology and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adata Technology Co and Wei Chuan Foods, you can compare the effects of market volatilities on Adata Technology and Wei Chuan 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 Adata Technology with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adata Technology and Wei Chuan.
Diversification Opportunities for Adata Technology and Wei Chuan
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adata and Wei is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Adata Technology Co and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and Adata Technology 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 Adata Technology Co are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Adata Technology i.e., Adata Technology and Wei Chuan go up and down completely randomly.
Pair Corralation between Adata Technology and Wei Chuan
Assuming the 90 days trading horizon Adata Technology Co is expected to generate 2.87 times more return on investment than Wei Chuan. However, Adata Technology is 2.87 times more volatile than Wei Chuan Foods. It trades about 0.47 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about 0.03 per unit of risk. If you would invest 7,393 in Adata Technology Co on December 5, 2024 and sell it today you would earn a total of 1,097 from holding Adata Technology Co or generate 14.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Adata Technology Co vs. Wei Chuan Foods
Performance |
Timeline |
Adata Technology |
Wei Chuan Foods |
Adata Technology and Wei Chuan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Adata Technology and Wei Chuan
The main advantage of trading using opposite Adata Technology and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adata Technology position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.Adata Technology vs. Transcend Information | Adata Technology vs. Phison Electronics | Adata Technology vs. Nanya Technology Corp | Adata Technology vs. Innolux Corp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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