Correlation Between Winbond Electronics and VIA Technologies
Can any of the company-specific risk be diversified away by investing in both Winbond Electronics and VIA Technologies 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 VIA Technologies 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 VIA Technologies, you can compare the effects of market volatilities on Winbond Electronics and VIA Technologies 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 VIA Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winbond Electronics and VIA Technologies.
Diversification Opportunities for Winbond Electronics and VIA Technologies
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Winbond and VIA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Winbond Electronics Corp and VIA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIA Technologies 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 VIA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIA Technologies has no effect on the direction of Winbond Electronics i.e., Winbond Electronics and VIA Technologies go up and down completely randomly.
Pair Corralation between Winbond Electronics and VIA Technologies
Assuming the 90 days trading horizon Winbond Electronics Corp is expected to under-perform the VIA Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Winbond Electronics Corp is 1.22 times less risky than VIA Technologies. The stock trades about -0.39 of its potential returns per unit of risk. The VIA Technologies is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 11,650 in VIA Technologies on September 1, 2024 and sell it today you would lose (1,350) from holding VIA Technologies or give up 11.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winbond Electronics Corp vs. VIA Technologies
Performance |
| Timeline |
| Winbond Electronics Corp |
| VIA Technologies |
Winbond Electronics and VIA Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winbond Electronics and VIA Technologies
The main advantage of trading using opposite Winbond Electronics and VIA Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winbond Electronics position performs unexpectedly, VIA Technologies 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 VIA Technologies will offset losses from the drop in VIA Technologies' long position.| Winbond Electronics vs. Macronix International Co | Winbond Electronics vs. United Microelectronics | Winbond Electronics vs. Mosel Vitelic | Winbond Electronics vs. Nanya Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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