Correlation Between Winbond Electronics and AOPEN
Can any of the company-specific risk be diversified away by investing in both Winbond Electronics and AOPEN 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 AOPEN 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 AOPEN Inc, you can compare the effects of market volatilities on Winbond Electronics and AOPEN 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 AOPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winbond Electronics and AOPEN.
Diversification Opportunities for Winbond Electronics and AOPEN
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Winbond and AOPEN is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Winbond Electronics Corp and AOPEN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOPEN Inc 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 AOPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOPEN Inc has no effect on the direction of Winbond Electronics i.e., Winbond Electronics and AOPEN go up and down completely randomly.
Pair Corralation between Winbond Electronics and AOPEN
Assuming the 90 days trading horizon Winbond Electronics Corp is expected to under-perform the AOPEN. But the stock apears to be less risky and, when comparing its historical volatility, Winbond Electronics Corp is 1.12 times less risky than AOPEN. The stock trades about -0.18 of its potential returns per unit of risk. The AOPEN Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 6,430 in AOPEN Inc on September 1, 2024 and sell it today you would lose (910.00) from holding AOPEN Inc or give up 14.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Winbond Electronics Corp vs. AOPEN Inc
Performance |
| Timeline |
| Winbond Electronics Corp |
| AOPEN Inc |
Winbond Electronics and AOPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winbond Electronics and AOPEN
The main advantage of trading using opposite Winbond Electronics and AOPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winbond Electronics position performs unexpectedly, AOPEN 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 AOPEN will offset losses from the drop in AOPEN'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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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