Correlation Between Wistron Information and Ingentec

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Can any of the company-specific risk be diversified away by investing in both Wistron Information and Ingentec 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 Wistron Information and Ingentec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wistron Information Technology and Ingentec, you can compare the effects of market volatilities on Wistron Information and Ingentec 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 Wistron Information with a short position of Ingentec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Information and Ingentec.

Diversification Opportunities for Wistron Information and Ingentec

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Wistron and Ingentec is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Information Technology and Ingentec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingentec and Wistron Information 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 Wistron Information Technology are associated (or correlated) with Ingentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingentec has no effect on the direction of Wistron Information i.e., Wistron Information and Ingentec go up and down completely randomly.

Pair Corralation between Wistron Information and Ingentec

Assuming the 90 days trading horizon Wistron Information Technology is expected to generate 0.84 times more return on investment than Ingentec. However, Wistron Information Technology is 1.19 times less risky than Ingentec. It trades about 0.04 of its potential returns per unit of risk. Ingentec is currently generating about 0.03 per unit of risk. If you would invest  7,967  in Wistron Information Technology on October 4, 2024 and sell it today you would earn a total of  3,383  from holding Wistron Information Technology or generate 42.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Wistron Information Technology  vs.  Ingentec

 Performance 
       Timeline  
Wistron Information 

Risk-Adjusted Performance

1 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ingentec 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Wistron Information and Ingentec Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wistron Information and Ingentec

The main advantage of trading using opposite Wistron Information and Ingentec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Information position performs unexpectedly, Ingentec 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 Ingentec will offset losses from the drop in Ingentec's long position.
The idea behind Wistron Information Technology and Ingentec 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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