Correlation Between Wistron Information and Onyx Healthcare

Can any of the company-specific risk be diversified away by investing in both Wistron Information and Onyx Healthcare 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 Onyx Healthcare 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 Onyx Healthcare, you can compare the effects of market volatilities on Wistron Information and Onyx Healthcare 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 Onyx Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Information and Onyx Healthcare.

Diversification Opportunities for Wistron Information and Onyx Healthcare

-0.16

Correlation Coefficient

Wistron Information  Onyx Healthcare

Good diversification

The 3 months correlation between Wistron and Onyx is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Information Technology and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare 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 Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of Wistron Information i.e., Wistron Information and Onyx Healthcare go up and down completely randomly.

Pair Corralation between Wistron Information and Onyx Healthcare

Assuming the 90 days trading horizon Wistron Information Technology is expected to generate 1.91 times more return on investment than Onyx Healthcare. However, Wistron Information is 1.91 times more volatile than Onyx Healthcare. It trades about 0.1 of its potential returns per unit of risk. Onyx Healthcare is currently generating about 0.0 per unit of risk. If you would invest  11,150  in Wistron Information Technology on September 22, 2024 and sell it today you would earn a total of  800.00  from holding Wistron Information Technology or generate 7.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Wistron Information Technology  vs.  Onyx Healthcare

Wistron Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wistron Information Technology are ranked lower than 2 (%) 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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Onyx Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onyx Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Wistron Information and Onyx Healthcare

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

The idea behind Wistron Information Technology and Onyx Healthcare 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.