Correlation Between WPG Holdings and ABC Taiwan

Can any of the company-specific risk be diversified away by investing in both WPG Holdings and ABC Taiwan 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 WPG Holdings and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WPG Holdings and ABC Taiwan Electronics, you can compare the effects of market volatilities on WPG Holdings and ABC Taiwan 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 WPG Holdings with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of WPG Holdings and ABC Taiwan.

Diversification Opportunities for WPG Holdings and ABC Taiwan

0.0

Correlation Coefficient

WPG Holdings  ABC Taiwan

Pay attention - limited upside

The 3 months correlation between WPG and ABC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WPG Holdings and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics and WPG Holdings 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 WPG Holdings are associated (or correlated) with ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of WPG Holdings i.e., WPG Holdings and ABC Taiwan go up and down completely randomly.

Pair Corralation between WPG Holdings and ABC Taiwan

If you would invest (100.00) in WPG Holdings on December 20, 2024 and sell it today you would earn a total of  100.00  from holding WPG Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

WPG Holdings  vs.  ABC Taiwan Electronics

WPG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days WPG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WPG Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ABC Taiwan Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABC Taiwan Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

Pair Trading with WPG Holdings and ABC Taiwan

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

The idea behind WPG Holdings and ABC Taiwan Electronics 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.