Correlation Between NEXCOM International and Wistron Information

Can any of the company-specific risk be diversified away by investing in both NEXCOM International and Wistron Information 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 NEXCOM International and Wistron Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NEXCOM International Co and Wistron Information Technology, you can compare the effects of market volatilities on NEXCOM International and Wistron Information 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 NEXCOM International with a short position of Wistron Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXCOM International and Wistron Information.

Diversification Opportunities for NEXCOM International and Wistron Information

-0.22

Correlation Coefficient

NEXCOM International  Wistron Information

Very good diversification

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

Pair Corralation between NEXCOM International and Wistron Information

Assuming the 90 days trading horizon NEXCOM International Co is expected to generate 1.53 times more return on investment than Wistron Information. However, NEXCOM International is 1.53 times more volatile than Wistron Information Technology. It trades about 0.03 of its potential returns per unit of risk. Wistron Information Technology is currently generating about -0.05 per unit of risk. If you would invest  4,935  in NEXCOM International Co on October 25, 2024 and sell it today you would earn a total of  575.00  from holding NEXCOM International Co or generate 11.65% return on investment over 90 days.

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

NEXCOM International Co  vs.  Wistron Information Technology

NEXCOM International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NEXCOM International Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NEXCOM International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wistron Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wistron Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with NEXCOM International and Wistron Information

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

The idea behind NEXCOM International Co and Wistron Information Technology 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.