Correlation Between Wistron NeWeb and Wonderful
Can any of the company-specific risk be diversified away by investing in both Wistron NeWeb and Wonderful 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 NeWeb and Wonderful into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wistron NeWeb Corp and Wonderful Hi Tech Co, you can compare the effects of market volatilities on Wistron NeWeb and Wonderful 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 NeWeb with a short position of Wonderful. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron NeWeb and Wonderful.
Diversification Opportunities for Wistron NeWeb and Wonderful
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wistron and Wonderful is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wistron NeWeb Corp and Wonderful Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonderful Hi Tech and Wistron NeWeb 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 NeWeb Corp are associated (or correlated) with Wonderful. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonderful Hi Tech has no effect on the direction of Wistron NeWeb i.e., Wistron NeWeb and Wonderful go up and down completely randomly.
Pair Corralation between Wistron NeWeb and Wonderful
Assuming the 90 days trading horizon Wistron NeWeb Corp is expected to generate 1.12 times more return on investment than Wonderful. However, Wistron NeWeb is 1.12 times more volatile than Wonderful Hi Tech Co. It trades about 0.09 of its potential returns per unit of risk. Wonderful Hi Tech Co is currently generating about -0.01 per unit of risk. If you would invest 12,050 in Wistron NeWeb Corp on September 25, 2024 and sell it today you would earn a total of 1,550 from holding Wistron NeWeb Corp or generate 12.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Wistron NeWeb Corp vs. Wonderful Hi Tech Co
Performance |
Timeline |
Wistron NeWeb Corp |
Wonderful Hi Tech |
Wistron NeWeb and Wonderful Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wistron NeWeb and Wonderful
The main advantage of trading using opposite Wistron NeWeb and Wonderful positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron NeWeb position performs unexpectedly, Wonderful 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 Wonderful will offset losses from the drop in Wonderful's long position.Wistron NeWeb vs. Century Wind Power | Wistron NeWeb vs. Green World Fintech | Wistron NeWeb vs. Ingentec | Wistron NeWeb vs. Chaheng Precision Co |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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