Correlation Between Walsin Lihwa and Feng Ching
Can any of the company-specific risk be diversified away by investing in both Walsin Lihwa and Feng Ching 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 Feng Ching 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 Feng Ching Metal, you can compare the effects of market volatilities on Walsin Lihwa and Feng Ching 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 Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Lihwa and Feng Ching.
Diversification Opportunities for Walsin Lihwa and Feng Ching
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walsin and Feng is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Lihwa Corp and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal 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 Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of Walsin Lihwa i.e., Walsin Lihwa and Feng Ching go up and down completely randomly.
Pair Corralation between Walsin Lihwa and Feng Ching
Assuming the 90 days trading horizon Walsin Lihwa Corp is expected to under-perform the Feng Ching. In addition to that, Walsin Lihwa is 1.01 times more volatile than Feng Ching Metal. It trades about -0.15 of its total potential returns per unit of risk. Feng Ching Metal is currently generating about -0.07 per unit of volatility. If you would invest 2,063 in Feng Ching Metal on August 27, 2024 and sell it today you would lose (63.00) from holding Feng Ching Metal or give up 3.05% 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. Feng Ching Metal
Performance |
| Timeline |
| Walsin Lihwa Corp |
| Feng Ching Metal |
Walsin Lihwa and Feng Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Lihwa and Feng Ching
The main advantage of trading using opposite Walsin Lihwa and Feng Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Lihwa position performs unexpectedly, Feng Ching 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 Feng Ching will offset losses from the drop in Feng Ching's long position.| Walsin Lihwa vs. Sunny Friend Environmental | Walsin Lihwa vs. TTET Union Corp | Walsin Lihwa vs. ECOVE Environment Corp | Walsin Lihwa vs. Yulon Finance Corp |
| Feng Ching vs. Walsin Lihwa Corp | Feng Ching vs. Ta Ya Electric | Feng Ching vs. Hiwin Mikrosystem Corp | Feng Ching vs. Amtran Technology Co |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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