Correlation Between Wei Chih and Chicony Power
Can any of the company-specific risk be diversified away by investing in both Wei Chih and Chicony Power 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 Chicony Power 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 Chicony Power Technology, you can compare the effects of market volatilities on Wei Chih and Chicony Power 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 Chicony Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chih and Chicony Power.
Diversification Opportunities for Wei Chih and Chicony Power
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wei and Chicony is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chih Steel and Chicony Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Power Technology 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 Chicony Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Power Technology has no effect on the direction of Wei Chih i.e., Wei Chih and Chicony Power go up and down completely randomly.
Pair Corralation between Wei Chih and Chicony Power
Assuming the 90 days trading horizon Wei Chih is expected to generate 1.43 times less return on investment than Chicony Power. In addition to that, Wei Chih is 1.12 times more volatile than Chicony Power Technology. It trades about 0.11 of its total potential returns per unit of risk. Chicony Power Technology is currently generating about 0.17 per unit of volatility. If you would invest 12,000 in Chicony Power Technology on October 26, 2024 and sell it today you would earn a total of 600.00 from holding Chicony Power Technology or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chih Steel vs. Chicony Power Technology
Performance |
| Timeline |
| Wei Chih Steel |
| Chicony Power Technology |
Wei Chih and Chicony Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chih and Chicony Power
The main advantage of trading using opposite Wei Chih and Chicony Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chih position performs unexpectedly, Chicony Power 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 Chicony Power will offset losses from the drop in Chicony Power's long position.| Wei Chih vs. Chung Hung Steel | Wei Chih vs. Sheng Yu Steel | Wei Chih vs. Hsin Kuang Steel | Wei Chih vs. Tung Ho Steel |
| Chicony Power vs. Shinkong Insurance Co | Chicony Power vs. Jetwell Computer Co | Chicony Power vs. Far EasTone Telecommunications | Chicony Power vs. WinMate Communication INC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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