Correlation Between Waffer Technology and Cheng Fwa

Can any of the company-specific risk be diversified away by investing in both Waffer Technology and Cheng Fwa 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 Waffer Technology and Cheng Fwa into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Waffer Technology and Cheng Fwa

0.51

Correlation Coefficient

Waffer Technology  Cheng Fwa

Very weak diversification

The 3 months correlation between Waffer and Cheng is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Waffer Technology Corp and Cheng Fwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Fwa Industrial and Waffer Technology 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 Waffer Technology Corp are associated (or correlated) with Cheng Fwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Fwa Industrial has no effect on the direction of Waffer Technology i.e., Waffer Technology and Cheng Fwa go up and down completely randomly.

Pair Corralation between Waffer Technology and Cheng Fwa

Assuming the 90 days trading horizon Waffer Technology is expected to generate 1.41 times less return on investment than Cheng Fwa. In addition to that, Waffer Technology is 1.43 times more volatile than Cheng Fwa Industrial. It trades about 0.14 of its total potential returns per unit of risk. Cheng Fwa Industrial is currently generating about 0.29 per unit of volatility. If you would invest  2,855  in Cheng Fwa Industrial on December 4, 2024 and sell it today you would earn a total of  255.00  from holding Cheng Fwa Industrial or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Waffer Technology Corp  vs.  Cheng Fwa Industrial

Waffer Technology Corp

Risk-Adjusted Performance

Very Weak

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

Cheng Fwa Industrial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Waffer Technology and Cheng Fwa

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

The idea behind Waffer Technology Corp and Cheng Fwa Industrial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.