Correlation Between Wei Chih and Xintec
Can any of the company-specific risk be diversified away by investing in both Wei Chih and Xintec 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 Wei Chih and Xintec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wei Chih Steel and Xintec, you can compare the effects of market volatilities on Wei Chih and Xintec 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 Wei Chih with a short position of Xintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chih and Xintec.
Diversification Opportunities for Wei Chih and Xintec
Modest diversification
The 3 months correlation between Wei and Xintec is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chih Steel and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and Wei Chih 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 Wei Chih Steel are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Wei Chih i.e., Wei Chih and Xintec go up and down completely randomly.
Pair Corralation between Wei Chih and Xintec
Assuming the 90 days trading horizon Wei Chih Steel is expected to under-perform the Xintec. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chih Steel is 1.56 times less risky than Xintec. The stock trades about 0.0 of its potential returns per unit of risk. The Xintec is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,497 in Xintec on September 12, 2024 and sell it today you would earn a total of 6,503 from holding Xintec or generate 48.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.42% |
| Values | Daily Returns |
Wei Chih Steel vs. Xintec
Performance |
| Timeline |
| Wei Chih Steel |
| Xintec |
Wei Chih and Xintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chih and Xintec
The main advantage of trading using opposite Wei Chih and Xintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chih position performs unexpectedly, Xintec 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 Xintec will offset losses from the drop in Xintec's long position.| Wei Chih vs. Tainan Spinning Co | Wei Chih vs. Lealea Enterprise Co | Wei Chih vs. China Petrochemical Development | Wei Chih vs. Ruentex Development Co |
| Xintec vs. Wei Chih Steel | Xintec vs. Century Iron And | Xintec vs. Lian Hwa Foods | Xintec vs. Tang Eng Iron |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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