Correlation Between Hong Tai and Walsin Lihwa
Can any of the company-specific risk be diversified away by investing in both Hong Tai 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 Hong Tai and Walsin Lihwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hong Tai Electric and Walsin Lihwa Corp, you can compare the effects of market volatilities on Hong Tai 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 Hong Tai with a short position of Walsin Lihwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hong Tai and Walsin Lihwa.
Diversification Opportunities for Hong Tai and Walsin Lihwa
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hong and Walsin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hong Tai Electric 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 Hong Tai 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 Hong Tai Electric 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 Hong Tai i.e., Hong Tai and Walsin Lihwa go up and down completely randomly.
Pair Corralation between Hong Tai and Walsin Lihwa
Assuming the 90 days trading horizon Hong Tai Electric is expected to generate 1.2 times more return on investment than Walsin Lihwa. However, Hong Tai is 1.2 times more volatile than Walsin Lihwa Corp. It trades about 0.08 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 1,635 in Hong Tai Electric on August 30, 2024 and sell it today you would earn a total of 1,800 from holding Hong Tai Electric or generate 110.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hong Tai Electric vs. Walsin Lihwa Corp
Performance |
| Timeline |
| Hong Tai Electric |
| Walsin Lihwa Corp |
Hong Tai and Walsin Lihwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hong Tai and Walsin Lihwa
The main advantage of trading using opposite Hong Tai and Walsin Lihwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hong Tai 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.| Hong Tai vs. Ta Ya Electric | Hong Tai vs. Hua Eng Wire | Hong Tai vs. Walsin Lihwa Corp | Hong Tai vs. Sampo Corp |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |