Correlation Between StShine Optical and Wafer Works
Can any of the company-specific risk be diversified away by investing in both StShine Optical and Wafer Works 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 StShine Optical and Wafer Works into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between StShine Optical Co and Wafer Works, you can compare the effects of market volatilities on StShine Optical and Wafer Works 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 StShine Optical with a short position of Wafer Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of StShine Optical and Wafer Works.
Diversification Opportunities for StShine Optical and Wafer Works
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between StShine and Wafer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding StShine Optical Co and Wafer Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wafer Works and StShine Optical 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 StShine Optical Co are associated (or correlated) with Wafer Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wafer Works has no effect on the direction of StShine Optical i.e., StShine Optical and Wafer Works go up and down completely randomly.
Pair Corralation between StShine Optical and Wafer Works
Assuming the 90 days trading horizon StShine Optical Co is expected to generate 0.82 times more return on investment than Wafer Works. However, StShine Optical Co is 1.22 times less risky than Wafer Works. It trades about 0.02 of its potential returns per unit of risk. Wafer Works is currently generating about -0.08 per unit of risk. If you would invest 18,604 in StShine Optical Co on December 11, 2024 and sell it today you would earn a total of 946.00 from holding StShine Optical Co or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
StShine Optical Co vs. Wafer Works
Performance |
| Timeline |
| StShine Optical |
| Wafer Works |
StShine Optical and Wafer Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with StShine Optical and Wafer Works
The main advantage of trading using opposite StShine Optical and Wafer Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StShine Optical position performs unexpectedly, Wafer Works 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 Wafer Works will offset losses from the drop in Wafer Works' long position.| StShine Optical vs. General Plastic Industrial | ||
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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