Correlation Between Far Eastern and Winbond Electronics
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Winbond Electronics 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 Far Eastern and Winbond Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far Eastern New and Winbond Electronics Corp, you can compare the effects of market volatilities on Far Eastern and Winbond Electronics 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 Far Eastern with a short position of Winbond Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Winbond Electronics.
Diversification Opportunities for Far Eastern and Winbond Electronics
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Far and Winbond is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern New and Winbond Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winbond Electronics Corp and Far Eastern 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 Far Eastern New are associated (or correlated) with Winbond Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winbond Electronics Corp has no effect on the direction of Far Eastern i.e., Far Eastern and Winbond Electronics go up and down completely randomly.
Pair Corralation between Far Eastern and Winbond Electronics
Assuming the 90 days trading horizon Far Eastern New is expected to generate 0.91 times more return on investment than Winbond Electronics. However, Far Eastern New is 1.09 times less risky than Winbond Electronics. It trades about 0.03 of its potential returns per unit of risk. Winbond Electronics Corp is currently generating about -0.23 per unit of risk. If you would invest 3,785 in Far Eastern New on August 26, 2024 and sell it today you would earn a total of 35.00 from holding Far Eastern New or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern New vs. Winbond Electronics Corp
Performance |
| Timeline |
| Far Eastern New |
| Winbond Electronics Corp |
Far Eastern and Winbond Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Winbond Electronics
The main advantage of trading using opposite Far Eastern and Winbond Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Winbond Electronics 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 Winbond Electronics will offset losses from the drop in Winbond Electronics' long position.| Far Eastern vs. Sunny Friend Environmental | Far Eastern vs. TTET Union Corp | Far Eastern vs. ECOVE Environment Corp | Far Eastern vs. Yulon Finance Corp |
| Winbond Electronics vs. Novatek Microelectronics Corp | Winbond Electronics vs. Quanta Computer | Winbond Electronics vs. United Microelectronics |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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