Correlation Between Great Wall and Walsin Lihwa
Can any of the company-specific risk be diversified away by investing in both Great Wall and Walsin Lihwa 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 Great Wall and Walsin Lihwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Walsin Lihwa Corp, you can compare the effects of market volatilities on Great Wall and Walsin Lihwa 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 Great Wall with a short position of Walsin Lihwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Walsin Lihwa.
Diversification Opportunities for Great Wall and Walsin Lihwa
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Great and Walsin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Walsin Lihwa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Lihwa Corp and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Walsin Lihwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Lihwa Corp has no effect on the direction of Great Wall i.e., Great Wall and Walsin Lihwa go up and down completely randomly.
Pair Corralation between Great Wall and Walsin Lihwa
Assuming the 90 days trading horizon Great Wall Enterprise is expected to under-perform the Walsin Lihwa. But the stock apears to be less risky and, when comparing its historical volatility, Great Wall Enterprise is 1.61 times less risky than Walsin Lihwa. The stock trades about -0.02 of its potential returns per unit of risk. The Walsin Lihwa Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,335 in Walsin Lihwa Corp on November 5, 2024 and sell it today you would earn a total of 115.00 from holding Walsin Lihwa Corp or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Walsin Lihwa Corp
Performance |
| Timeline |
| Great Wall Enterprise |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Walsin Lihwa Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Great Wall and Walsin Lihwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Walsin Lihwa
The main advantage of trading using opposite Great Wall and Walsin Lihwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Walsin Lihwa 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 Lihwa will offset losses from the drop in Walsin Lihwa's long position.The idea behind Great Wall Enterprise and Walsin Lihwa 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.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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