Correlation Between Microelectronics and Higher Way
Can any of the company-specific risk be diversified away by investing in both Microelectronics and Higher Way 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 Microelectronics and Higher Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microelectronics Technology and Higher Way Electronic, you can compare the effects of market volatilities on Microelectronics and Higher Way 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 Microelectronics with a short position of Higher Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and Higher Way.
Diversification Opportunities for Microelectronics and Higher Way
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microelectronics and Higher is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology and Higher Way Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Higher Way Electronic and Microelectronics 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 Microelectronics Technology are associated (or correlated) with Higher Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Higher Way Electronic has no effect on the direction of Microelectronics i.e., Microelectronics and Higher Way go up and down completely randomly.
Pair Corralation between Microelectronics and Higher Way
Assuming the 90 days trading horizon Microelectronics Technology is expected to generate 1.57 times more return on investment than Higher Way. However, Microelectronics is 1.57 times more volatile than Higher Way Electronic. It trades about 0.08 of its potential returns per unit of risk. Higher Way Electronic is currently generating about -0.17 per unit of risk. If you would invest 2,960 in Microelectronics Technology on October 24, 2024 and sell it today you would earn a total of 465.00 from holding Microelectronics Technology or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microelectronics Technology vs. Higher Way Electronic
Performance |
| Timeline |
| Microelectronics Tec |
| Higher Way Electronic |
Microelectronics and Higher Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microelectronics and Higher Way
The main advantage of trading using opposite Microelectronics and Higher Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microelectronics position performs unexpectedly, Higher Way 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 Higher Way will offset losses from the drop in Higher Way's long position.| Microelectronics vs. D Link Corp | Microelectronics vs. Accton Technology Corp | Microelectronics vs. Macronix International Co | Microelectronics vs. Ritek Corp |
| Higher Way vs. Microelectronics Technology | Higher Way vs. Jetwell Computer Co | Higher Way vs. Yuan High Tech Development | Higher Way vs. Emerging Display Technologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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