Correlation Between Winbond Electronics and Quanta Computer
Can any of the company-specific risk be diversified away by investing in both Winbond Electronics and Quanta Computer 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 Winbond Electronics and Quanta Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winbond Electronics Corp and Quanta Computer, you can compare the effects of market volatilities on Winbond Electronics and Quanta Computer 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 Winbond Electronics with a short position of Quanta Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winbond Electronics and Quanta Computer.
Diversification Opportunities for Winbond Electronics and Quanta Computer
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Winbond and Quanta is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Winbond Electronics Corp and Quanta Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Computer and Winbond Electronics 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 Winbond Electronics Corp are associated (or correlated) with Quanta Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Computer has no effect on the direction of Winbond Electronics i.e., Winbond Electronics and Quanta Computer go up and down completely randomly.
Pair Corralation between Winbond Electronics and Quanta Computer
Assuming the 90 days trading horizon Winbond Electronics Corp is expected to under-perform the Quanta Computer. But the stock apears to be less risky and, when comparing its historical volatility, Winbond Electronics Corp is 1.05 times less risky than Quanta Computer. The stock trades about -0.39 of its potential returns per unit of risk. The Quanta Computer is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 30,350 in Quanta Computer on September 1, 2024 and sell it today you would lose (1,250) from holding Quanta Computer or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winbond Electronics Corp vs. Quanta Computer
Performance |
| Timeline |
| Winbond Electronics Corp |
| Quanta Computer |
Winbond Electronics and Quanta Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winbond Electronics and Quanta Computer
The main advantage of trading using opposite Winbond Electronics and Quanta Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winbond Electronics position performs unexpectedly, Quanta Computer 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 Quanta Computer will offset losses from the drop in Quanta Computer's long position.| Winbond Electronics vs. Macronix International Co | Winbond Electronics vs. United Microelectronics | Winbond Electronics vs. Mosel Vitelic | Winbond Electronics vs. Nanya Technology Corp |
| Quanta Computer vs. Compal Electronics | Quanta Computer vs. Asustek Computer | Quanta Computer vs. Delta Electronics | Quanta Computer vs. Inventec 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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