Correlation Between China Metal and Wistron Information
Can any of the company-specific risk be diversified away by investing in both China Metal 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 China Metal and Wistron Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Metal Products and Wistron Information Technology, you can compare the effects of market volatilities on China Metal 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 China Metal with a short position of Wistron Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Wistron Information.
Diversification Opportunities for China Metal and Wistron Information
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Wistron is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Wistron Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Information and China Metal 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 China Metal Products 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 China Metal i.e., China Metal and Wistron Information go up and down completely randomly.
Pair Corralation between China Metal and Wistron Information
Assuming the 90 days trading horizon China Metal Products is expected to under-perform the Wistron Information. But the stock apears to be less risky and, when comparing its historical volatility, China Metal Products is 1.18 times less risky than Wistron Information. The stock trades about 0.0 of its potential returns per unit of risk. The Wistron Information Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,885 in Wistron Information Technology on August 28, 2024 and sell it today you would earn a total of 515.00 from holding Wistron Information Technology or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Wistron Information Technology
Performance |
| Timeline |
| China Metal Products |
| Wistron Information |
China Metal and Wistron Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Wistron Information
The main advantage of trading using opposite China Metal and Wistron Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal 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.| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
| Wistron Information vs. Wistron Corp | Wistron Information vs. Wistron NeWeb Corp | Wistron Information vs. Pegatron Corp | Wistron Information vs. Dimerco Data System |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |