Correlation Between China Electric and Walsin Lihwa
Can any of the company-specific risk be diversified away by investing in both China Electric and Walsin Lihwa 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 China Electric and Walsin Lihwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Electric Manufacturing and Walsin Lihwa Corp, you can compare the effects of market volatilities on China Electric and Walsin Lihwa 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 China Electric with a short position of Walsin Lihwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Electric and Walsin Lihwa.
Diversification Opportunities for China Electric and Walsin Lihwa
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Walsin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Electric Manufacturing and Walsin Lihwa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Lihwa Corp and China Electric 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 China Electric Manufacturing are associated (or correlated) with Walsin Lihwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Lihwa Corp has no effect on the direction of China Electric i.e., China Electric and Walsin Lihwa go up and down completely randomly.
Pair Corralation between China Electric and Walsin Lihwa
Assuming the 90 days trading horizon China Electric Manufacturing is expected to generate 1.12 times more return on investment than Walsin Lihwa. However, China Electric is 1.12 times more volatile than Walsin Lihwa Corp. It trades about 0.03 of its potential returns per unit of risk. Walsin Lihwa Corp is currently generating about -0.05 per unit of risk. If you would invest 1,400 in China Electric Manufacturing on August 30, 2024 and sell it today you would earn a total of 350.00 from holding China Electric Manufacturing or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Electric Manufacturing vs. Walsin Lihwa Corp
Performance |
| Timeline |
| China Electric Manuf |
| Walsin Lihwa Corp |
China Electric and Walsin Lihwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Electric and Walsin Lihwa
The main advantage of trading using opposite China Electric and Walsin Lihwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Electric position performs unexpectedly, Walsin Lihwa 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 Walsin Lihwa will offset losses from the drop in Walsin Lihwa's long position.| China Electric vs. Hold Key Electric Wire | China Electric vs. Anderson Industrial Corp | China Electric vs. Carnival Industrial Corp | China Electric vs. Lee Chi Enterprises |
| Walsin Lihwa vs. Yulon Motor Co | Walsin Lihwa vs. Far Eastern Department | Walsin Lihwa vs. China Steel Corp | Walsin Lihwa vs. Chang Hwa Commercial |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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