Correlation Between Walsin Lihwa and Amtran Technology
Can any of the company-specific risk be diversified away by investing in both Walsin Lihwa and Amtran 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 Amtran 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 Amtran Technology Co, you can compare the effects of market volatilities on Walsin Lihwa and Amtran 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 Amtran Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Lihwa and Amtran Technology.
Diversification Opportunities for Walsin Lihwa and Amtran Technology
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walsin and Amtran is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Lihwa Corp and Amtran Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtran Technology 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 Amtran Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtran Technology has no effect on the direction of Walsin Lihwa i.e., Walsin Lihwa and Amtran Technology go up and down completely randomly.
Pair Corralation between Walsin Lihwa and Amtran Technology
Assuming the 90 days trading horizon Walsin Lihwa Corp is expected to under-perform the Amtran Technology. But the stock apears to be less risky and, when comparing its historical volatility, Walsin Lihwa Corp is 1.47 times less risky than Amtran Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Amtran Technology Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Amtran Technology Co on August 26, 2024 and sell it today you would earn a total of 650.00 from holding Amtran Technology Co or generate 48.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walsin Lihwa Corp vs. Amtran Technology Co
Performance |
| Timeline |
| Walsin Lihwa Corp |
| Amtran Technology |
Walsin Lihwa and Amtran Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Lihwa and Amtran Technology
The main advantage of trading using opposite Walsin Lihwa and Amtran Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Lihwa position performs unexpectedly, Amtran 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 Amtran Technology will offset losses from the drop in Amtran Technology'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 |
| Amtran Technology vs. Taiwan Semiconductor Manufacturing | Amtran Technology vs. Hon Hai Precision | Amtran Technology vs. MediaTek | Amtran Technology vs. Chunghwa Telecom 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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