Correlation Between Walsin Lihwa and Taiwan Sanyo
Can any of the company-specific risk be diversified away by investing in both Walsin Lihwa and Taiwan Sanyo 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 Taiwan Sanyo 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 Taiwan Sanyo Electric, you can compare the effects of market volatilities on Walsin Lihwa and Taiwan Sanyo 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 Taiwan Sanyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Lihwa and Taiwan Sanyo.
Diversification Opportunities for Walsin Lihwa and Taiwan Sanyo
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walsin and Taiwan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Lihwa Corp and Taiwan Sanyo Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sanyo Electric 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 Taiwan Sanyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sanyo Electric has no effect on the direction of Walsin Lihwa i.e., Walsin Lihwa and Taiwan Sanyo go up and down completely randomly.
Pair Corralation between Walsin Lihwa and Taiwan Sanyo
Assuming the 90 days trading horizon Walsin Lihwa Corp is expected to under-perform the Taiwan Sanyo. In addition to that, Walsin Lihwa is 4.92 times more volatile than Taiwan Sanyo Electric. It trades about -0.23 of its total potential returns per unit of risk. Taiwan Sanyo Electric is currently generating about -0.21 per unit of volatility. If you would invest 4,010 in Taiwan Sanyo Electric on August 29, 2024 and sell it today you would lose (80.00) from holding Taiwan Sanyo Electric or give up 2.0% 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. Taiwan Sanyo Electric
Performance |
| Timeline |
| Walsin Lihwa Corp |
| Taiwan Sanyo Electric |
Walsin Lihwa and Taiwan Sanyo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Lihwa and Taiwan Sanyo
The main advantage of trading using opposite Walsin Lihwa and Taiwan Sanyo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Lihwa position performs unexpectedly, Taiwan Sanyo 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 Taiwan Sanyo will offset losses from the drop in Taiwan Sanyo's long position.| Walsin Lihwa vs. Yulon Motor Co | Walsin Lihwa vs. Far Eastern Department | Walsin Lihwa vs. China Steel Corp | Walsin Lihwa vs. Chang Hwa Commercial |
| Taiwan Sanyo vs. Sampo Corp | Taiwan Sanyo vs. China Electric Manufacturing | Taiwan Sanyo vs. Walsin Lihwa Corp | Taiwan Sanyo vs. Ta Ya Electric |
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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