Correlation Between Tung Thih and WT Microelectronics

Can any of the company-specific risk be diversified away by investing in both Tung Thih and WT Microelectronics 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 Tung Thih and WT Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tung Thih Electronic and WT Microelectronics Co, you can compare the effects of market volatilities on Tung Thih and WT Microelectronics 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 Tung Thih with a short position of WT Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and WT Microelectronics.

Diversification Opportunities for Tung Thih and WT Microelectronics

-0.29

Correlation Coefficient

Tung Thih  WT Microelectronics

Very good diversification

The 3 months correlation between Tung and 3036A is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic and WT Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Microelectronics and Tung Thih 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 Tung Thih Electronic are associated (or correlated) with WT Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Microelectronics has no effect on the direction of Tung Thih i.e., Tung Thih and WT Microelectronics go up and down completely randomly.

Pair Corralation between Tung Thih and WT Microelectronics

Assuming the 90 days trading horizon Tung Thih Electronic is expected to under-perform the WT Microelectronics. In addition to that, Tung Thih is 28.17 times more volatile than WT Microelectronics Co. It trades about -0.02 of its total potential returns per unit of risk. WT Microelectronics Co is currently generating about 0.53 per unit of volatility. If you would invest  4,840  in WT Microelectronics Co on October 25, 2024 and sell it today you would earn a total of  180.00  from holding WT Microelectronics Co or generate 3.72% return on investment over 90 days.

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

Tung Thih Electronic  vs.  WT Microelectronics Co

Tung Thih Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tung Thih Electronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tung Thih is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WT Microelectronics

Risk-Adjusted Performance

41 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in WT Microelectronics Co are ranked lower than 41 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WT Microelectronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tung Thih and WT Microelectronics

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

The idea behind Tung Thih Electronic and WT Microelectronics 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.