Correlation Between Hiwin Mikrosystem and Voltronic Power

Can any of the company-specific risk be diversified away by investing in both Hiwin Mikrosystem and Voltronic Power 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 Hiwin Mikrosystem and Voltronic Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Hiwin Mikrosystem and Voltronic Power

-0.06

Correlation Coefficient

Hiwin Mikrosystem  Voltronic Power

Good diversification

The 3 months correlation between Hiwin and Voltronic is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hiwin Mikrosystem Corp and Voltronic Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltronic Power Tech and Hiwin Mikrosystem 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 Hiwin Mikrosystem Corp are associated (or correlated) with Voltronic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltronic Power Tech has no effect on the direction of Hiwin Mikrosystem i.e., Hiwin Mikrosystem and Voltronic Power go up and down completely randomly.

Pair Corralation between Hiwin Mikrosystem and Voltronic Power

Assuming the 90 days trading horizon Hiwin Mikrosystem Corp is expected to generate 1.54 times more return on investment than Voltronic Power. However, Hiwin Mikrosystem is 1.54 times more volatile than Voltronic Power Technology. It trades about -0.04 of its potential returns per unit of risk. Voltronic Power Technology is currently generating about -0.1 per unit of risk. If you would invest  14,450  in Hiwin Mikrosystem Corp on September 23, 2024 and sell it today you would lose (1,600) from holding Hiwin Mikrosystem Corp or give up 11.07% of portfolio value over 90 days.

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

Hiwin Mikrosystem Corp  vs.  Voltronic Power Technology

Hiwin Mikrosystem Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Mikrosystem Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Mikrosystem showed solid returns over the last few months and may actually be approaching a breakup point.

Voltronic Power Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltronic Power Technology 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Hiwin Mikrosystem and Voltronic Power

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

The idea behind Hiwin Mikrosystem Corp and Voltronic Power Technology 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.