Correlation Between Winbond Electronics and Leadtek Research
Can any of the company-specific risk be diversified away by investing in both Winbond Electronics and Leadtek Research 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 Leadtek Research 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 Leadtek Research, you can compare the effects of market volatilities on Winbond Electronics and Leadtek Research 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 Leadtek Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winbond Electronics and Leadtek Research.
Diversification Opportunities for Winbond Electronics and Leadtek Research
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Winbond and Leadtek is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Winbond Electronics Corp and Leadtek Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leadtek Research 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 Leadtek Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leadtek Research has no effect on the direction of Winbond Electronics i.e., Winbond Electronics and Leadtek Research go up and down completely randomly.
Pair Corralation between Winbond Electronics and Leadtek Research
Assuming the 90 days trading horizon Winbond Electronics Corp is expected to generate 0.47 times more return on investment than Leadtek Research. However, Winbond Electronics Corp is 2.15 times less risky than Leadtek Research. It trades about -0.39 of its potential returns per unit of risk. Leadtek Research is currently generating about -0.21 per unit of risk. If you would invest 1,925 in Winbond Electronics Corp on September 1, 2024 and sell it today you would lose (320.00) from holding Winbond Electronics Corp or give up 16.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Winbond Electronics Corp vs. Leadtek Research
Performance |
| Timeline |
| Winbond Electronics Corp |
| Leadtek Research |
Winbond Electronics and Leadtek Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winbond Electronics and Leadtek Research
The main advantage of trading using opposite Winbond Electronics and Leadtek Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winbond Electronics position performs unexpectedly, Leadtek Research 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 Leadtek Research will offset losses from the drop in Leadtek Research'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 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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