Correlation Between Wei Chih and Onyx Healthcare
Can any of the company-specific risk be diversified away by investing in both Wei Chih and Onyx Healthcare 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 Onyx Healthcare 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 Onyx Healthcare, you can compare the effects of market volatilities on Wei Chih and Onyx Healthcare 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 Onyx Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wei Chih and Onyx Healthcare.
Diversification Opportunities for Wei Chih and Onyx Healthcare
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wei and Onyx is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wei Chih Steel and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare 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 Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of Wei Chih i.e., Wei Chih and Onyx Healthcare go up and down completely randomly.
Pair Corralation between Wei Chih and Onyx Healthcare
Assuming the 90 days trading horizon Wei Chih Steel is expected to under-perform the Onyx Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Wei Chih Steel is 1.75 times less risky than Onyx Healthcare. The stock trades about -0.07 of its potential returns per unit of risk. The Onyx Healthcare is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 15,950 in Onyx Healthcare on September 1, 2024 and sell it today you would lose (250.00) from holding Onyx Healthcare or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wei Chih Steel vs. Onyx Healthcare
Performance |
| Timeline |
| Wei Chih Steel |
| Onyx Healthcare |
Wei Chih and Onyx Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wei Chih and Onyx Healthcare
The main advantage of trading using opposite Wei Chih and Onyx Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wei Chih position performs unexpectedly, Onyx Healthcare 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 Onyx Healthcare will offset losses from the drop in Onyx Healthcare'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 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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