Correlation Between Adata Technology and GlobalWafers

Can any of the company-specific risk be diversified away by investing in both Adata Technology and GlobalWafers 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 GlobalWafers 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 GlobalWafers Co, you can compare the effects of market volatilities on Adata Technology and GlobalWafers 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 GlobalWafers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adata Technology and GlobalWafers.

Diversification Opportunities for Adata Technology and GlobalWafers

0.87

Correlation Coefficient

Adata Technology  GlobalWafers

Very poor diversification

The 3 months correlation between Adata and GlobalWafers is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Adata Technology Co and GlobalWafers Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalWafers 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 GlobalWafers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalWafers has no effect on the direction of Adata Technology i.e., Adata Technology and GlobalWafers go up and down completely randomly.

Pair Corralation between Adata Technology and GlobalWafers

Assuming the 90 days trading horizon Adata Technology Co is expected to generate 1.32 times more return on investment than GlobalWafers. However, Adata Technology is 1.32 times more volatile than GlobalWafers Co. It trades about 0.04 of its potential returns per unit of risk. GlobalWafers Co is currently generating about -0.01 per unit of risk. If you would invest  5,813  in Adata Technology Co on October 7, 2024 and sell it today you would earn a total of  1,967  from holding Adata Technology Co or generate 33.84% return on investment over 90 days.

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

Adata Technology Co  vs.  GlobalWafers Co

Adata Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adata Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

GlobalWafers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalWafers Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Adata Technology and GlobalWafers

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

The idea behind Adata Technology Co and GlobalWafers Co 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.