Correlation Between Yulon Nissan and Wafer Works
Can any of the company-specific risk be diversified away by investing in both Yulon Nissan and Wafer Works 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 Yulon Nissan and Wafer Works into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yulon Nissan Motor and Wafer Works, you can compare the effects of market volatilities on Yulon Nissan and Wafer Works 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 Yulon Nissan with a short position of Wafer Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yulon Nissan and Wafer Works.
Diversification Opportunities for Yulon Nissan and Wafer Works
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yulon and Wafer is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Yulon Nissan Motor and Wafer Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wafer Works and Yulon Nissan 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 Yulon Nissan Motor are associated (or correlated) with Wafer Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wafer Works has no effect on the direction of Yulon Nissan i.e., Yulon Nissan and Wafer Works go up and down completely randomly.
Pair Corralation between Yulon Nissan and Wafer Works
Assuming the 90 days trading horizon Yulon Nissan Motor is expected to generate 0.85 times more return on investment than Wafer Works. However, Yulon Nissan Motor is 1.17 times less risky than Wafer Works. It trades about -0.21 of its potential returns per unit of risk. Wafer Works is currently generating about -0.34 per unit of risk. If you would invest 7,790 in Yulon Nissan Motor on October 25, 2024 and sell it today you would lose (650.00) from holding Yulon Nissan Motor or give up 8.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yulon Nissan Motor vs. Wafer Works
Performance |
| Timeline |
| Yulon Nissan Motor |
| Wafer Works |
Yulon Nissan and Wafer Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yulon Nissan and Wafer Works
The main advantage of trading using opposite Yulon Nissan and Wafer Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yulon Nissan position performs unexpectedly, Wafer Works 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 Wafer Works will offset losses from the drop in Wafer Works' long position.| Yulon Nissan vs. Hotai Motor Co | Yulon Nissan vs. Yulon Motor Co | Yulon Nissan vs. Cheng Shin Rubber | Yulon Nissan vs. Formosa Chemicals Fibre |
| Wafer Works vs. Sino American Silicon Products | Wafer Works vs. GlobalWafers Co | Wafer Works vs. Motech Industries Co | Wafer Works vs. Formosa Sumco Technology |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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