Correlation Between Walsin Lihwa and UPC Technology
Can any of the company-specific risk be diversified away by investing in both Walsin Lihwa and UPC Technology 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 Walsin Lihwa and UPC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walsin Lihwa Corp and UPC Technology Corp, you can compare the effects of market volatilities on Walsin Lihwa and UPC Technology 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 Walsin Lihwa with a short position of UPC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Lihwa and UPC Technology.
Diversification Opportunities for Walsin Lihwa and UPC Technology
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walsin and UPC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Lihwa Corp and UPC Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPC Technology Corp and Walsin Lihwa 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 Walsin Lihwa Corp are associated (or correlated) with UPC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPC Technology Corp has no effect on the direction of Walsin Lihwa i.e., Walsin Lihwa and UPC Technology go up and down completely randomly.
Pair Corralation between Walsin Lihwa and UPC Technology
Assuming the 90 days trading horizon Walsin Lihwa Corp is expected to under-perform the UPC Technology. In addition to that, Walsin Lihwa is 1.29 times more volatile than UPC Technology Corp. It trades about -0.3 of its total potential returns per unit of risk. UPC Technology Corp is currently generating about -0.17 per unit of volatility. If you would invest 1,135 in UPC Technology Corp on September 2, 2024 and sell it today you would lose (70.00) from holding UPC Technology Corp or give up 6.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walsin Lihwa Corp vs. UPC Technology Corp
Performance |
| Timeline |
| Walsin Lihwa Corp |
| UPC Technology Corp |
Walsin Lihwa and UPC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Lihwa and UPC Technology
The main advantage of trading using opposite Walsin Lihwa and UPC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Lihwa position performs unexpectedly, UPC Technology 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 UPC Technology will offset losses from the drop in UPC Technology's long position.| Walsin Lihwa vs. TECO Electric Machinery | Walsin Lihwa vs. Far Eastern New | Walsin Lihwa vs. Nan Ya Plastics | Walsin Lihwa vs. Winbond Electronics Corp |
| UPC Technology vs. Basso Industry Corp | UPC Technology vs. Chung Hsin Electric Machinery | UPC Technology vs. TYC Brother Industrial | UPC Technology vs. TECO Electric Machinery |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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