Correlation Between Walsin Lihwa and STL Technology
Can any of the company-specific risk be diversified away by investing in both Walsin Lihwa and STL 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 STL 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 STL Technology Co, you can compare the effects of market volatilities on Walsin Lihwa and STL 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 STL Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Lihwa and STL Technology.
Diversification Opportunities for Walsin Lihwa and STL Technology
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walsin and STL is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Lihwa Corp and STL Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STL 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 STL Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STL Technology has no effect on the direction of Walsin Lihwa i.e., Walsin Lihwa and STL Technology go up and down completely randomly.
Pair Corralation between Walsin Lihwa and STL Technology
Assuming the 90 days trading horizon Walsin Lihwa Corp is expected to under-perform the STL Technology. But the stock apears to be less risky and, when comparing its historical volatility, Walsin Lihwa Corp is 2.1 times less risky than STL Technology. The stock trades about -0.25 of its potential returns per unit of risk. The STL Technology Co is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest 3,395 in STL Technology Co on September 1, 2024 and sell it today you would earn a total of 2,655 from holding STL Technology Co or generate 78.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walsin Lihwa Corp vs. STL Technology Co
Performance |
| Timeline |
| Walsin Lihwa Corp |
| STL Technology |
Walsin Lihwa and STL Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Lihwa and STL Technology
The main advantage of trading using opposite Walsin Lihwa and STL Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Lihwa position performs unexpectedly, STL 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 STL Technology will offset losses from the drop in STL 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 |
| STL Technology vs. Simplo Technology Co | STL Technology vs. Dynapack International Technology | STL Technology vs. Celxpert Energy | STL Technology vs. C Tech United |
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 Stocks Directory module to find actively traded stocks across global markets.
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