Correlation Between General Interface and Walsin Technology

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

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

Diversification Opportunities for General Interface and Walsin Technology

0.87

Correlation Coefficient

General Interface  Walsin Technology

Very poor diversification

The 3 months correlation between General and Walsin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding General Interface Solution and Walsin Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Technology Corp and General Interface 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 General Interface Solution are associated (or correlated) with Walsin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Technology Corp has no effect on the direction of General Interface i.e., General Interface and Walsin Technology go up and down completely randomly.

Pair Corralation between General Interface and Walsin Technology

Assuming the 90 days trading horizon General Interface Solution is expected to generate 1.35 times more return on investment than Walsin Technology. However, General Interface is 1.35 times more volatile than Walsin Technology Corp. It trades about -0.02 of its potential returns per unit of risk. Walsin Technology Corp is currently generating about -0.13 per unit of risk. If you would invest  5,680  in General Interface Solution on October 12, 2024 and sell it today you would lose (220.00) from holding General Interface Solution or give up 3.87% of portfolio value over 90 days.

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

General Interface Solution  vs.  Walsin Technology Corp

General Interface

Risk-Adjusted Performance

0 of 100

Very Weak

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

Walsin Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with General Interface and Walsin Technology

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

The idea behind General Interface Solution and Walsin Technology Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.