Correlation Between Winbond Electronics and Asia Optical
Can any of the company-specific risk be diversified away by investing in both Winbond Electronics and Asia Optical 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 Asia Optical 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 Asia Optical Co, you can compare the effects of market volatilities on Winbond Electronics and Asia Optical 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 Asia Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winbond Electronics and Asia Optical.
Diversification Opportunities for Winbond Electronics and Asia Optical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Winbond and Asia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Winbond Electronics Corp and Asia Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Optical 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 Asia Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Optical has no effect on the direction of Winbond Electronics i.e., Winbond Electronics and Asia Optical go up and down completely randomly.
Pair Corralation between Winbond Electronics and Asia Optical
Assuming the 90 days trading horizon Winbond Electronics Corp is expected to under-perform the Asia Optical. But the stock apears to be less risky and, when comparing its historical volatility, Winbond Electronics Corp is 1.37 times less risky than Asia Optical. The stock trades about -0.41 of its potential returns per unit of risk. The Asia Optical Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,500 in Asia Optical Co on September 2, 2024 and sell it today you would earn a total of 250.00 from holding Asia Optical Co or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winbond Electronics Corp vs. Asia Optical Co
Performance |
| Timeline |
| Winbond Electronics Corp |
| Asia Optical |
Winbond Electronics and Asia Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winbond Electronics and Asia Optical
The main advantage of trading using opposite Winbond Electronics and Asia Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winbond Electronics position performs unexpectedly, Asia Optical 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 Asia Optical will offset losses from the drop in Asia Optical'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 |
| Asia Optical vs. LARGAN Precision Co | Asia Optical vs. Novatek Microelectronics Corp | Asia Optical vs. Genius Electronic Optical | Asia Optical vs. Catcher Technology Co |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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