Correlation Between Genius Electronic and Walsin Technology

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

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

Diversification Opportunities for Genius Electronic and Walsin Technology

0.02

Correlation Coefficient

Genius Electronic  Walsin Technology

Significant diversification

The 3 months correlation between Genius and Walsin is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Genius Electronic Optical and Walsin Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Technology Corp and Genius Electronic 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 Genius Electronic Optical are associated (or correlated) with Walsin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Technology Corp has no effect on the direction of Genius Electronic i.e., Genius Electronic and Walsin Technology go up and down completely randomly.

Pair Corralation between Genius Electronic and Walsin Technology

Assuming the 90 days trading horizon Genius Electronic Optical is expected to under-perform the Walsin Technology. In addition to that, Genius Electronic is 1.39 times more volatile than Walsin Technology Corp. It trades about -0.06 of its total potential returns per unit of risk. Walsin Technology Corp is currently generating about 0.07 per unit of volatility. If you would invest  9,300  in Walsin Technology Corp on December 21, 2024 and sell it today you would earn a total of  470.00  from holding Walsin Technology Corp or generate 5.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

Genius Electronic Optical  vs.  Walsin Technology Corp

Genius Electronic Optical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genius Electronic Optical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Walsin Technology Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walsin Technology Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Walsin Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Genius Electronic and Walsin Technology

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

The idea behind Genius Electronic Optical and Walsin Technology Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.