Correlation Between Wei Chih and Cameo Communications
Can any of the company-specific risk be diversified away by investing in both Wei Chih and Cameo Communications 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 Cameo Communications 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 Cameo Communications, you can compare the effects of market volatilities on Wei Chih and Cameo Communications 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 Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chih and Cameo Communications.
Diversification Opportunities for Wei Chih and Cameo Communications
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wei and Cameo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chih Steel and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications 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 Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Wei Chih i.e., Wei Chih and Cameo Communications go up and down completely randomly.
Pair Corralation between Wei Chih and Cameo Communications
Assuming the 90 days trading horizon Wei Chih Steel is expected to under-perform the Cameo Communications. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chih Steel is 1.17 times less risky than Cameo Communications. The stock trades about -0.03 of its potential returns per unit of risk. The Cameo Communications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 995.00 in Cameo Communications on September 14, 2024 and sell it today you would earn a total of 205.00 from holding Cameo Communications or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chih Steel vs. Cameo Communications
Performance |
| Timeline |
| Wei Chih Steel |
| Cameo Communications |
Wei Chih and Cameo Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chih and Cameo Communications
The main advantage of trading using opposite Wei Chih and Cameo Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chih position performs unexpectedly, Cameo Communications 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 Cameo Communications will offset losses from the drop in Cameo Communications' 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 |
| Cameo Communications vs. Gemtek Technology Co | Cameo Communications vs. CyberTAN Technology | Cameo Communications vs. Alpha Networks | Cameo Communications vs. D Link Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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