Correlation Between Innolux Corp and Advanced Wireless

Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Advanced Wireless 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 Innolux Corp and Advanced Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innolux Corp and Advanced Wireless Semiconductor, you can compare the effects of market volatilities on Innolux Corp and Advanced Wireless 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 Innolux Corp with a short position of Advanced Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Advanced Wireless.

Diversification Opportunities for Innolux Corp and Advanced Wireless

-0.34

Correlation Coefficient

Innolux Corp  Advanced Wireless

Very good diversification

The 3 months correlation between Innolux and Advanced is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Advanced Wireless Semiconducto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Wireless and Innolux 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 Innolux Corp are associated (or correlated) with Advanced Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Wireless has no effect on the direction of Innolux Corp i.e., Innolux Corp and Advanced Wireless go up and down completely randomly.

Pair Corralation between Innolux Corp and Advanced Wireless

Assuming the 90 days trading horizon Innolux Corp is expected to under-perform the Advanced Wireless. But the stock apears to be less risky and, when comparing its historical volatility, Innolux Corp is 1.55 times less risky than Advanced Wireless. The stock trades about -0.22 of its potential returns per unit of risk. The Advanced Wireless Semiconductor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,250  in Advanced Wireless Semiconductor on October 4, 2024 and sell it today you would earn a total of  500.00  from holding Advanced Wireless Semiconductor or generate 4.88% return on investment over 90 days.

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

Innolux Corp  vs.  Advanced Wireless Semiconducto

Innolux Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innolux Corp 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.

Advanced Wireless

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Innolux Corp and Advanced Wireless

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

The idea behind Innolux Corp and Advanced Wireless Semiconductor 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.