Correlation Between Winbond Electronics and Posiflex Technology
Can any of the company-specific risk be diversified away by investing in both Winbond Electronics and Posiflex Technology 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 Posiflex Technology 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 Posiflex Technology, you can compare the effects of market volatilities on Winbond Electronics and Posiflex Technology 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 Posiflex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winbond Electronics and Posiflex Technology.
Diversification Opportunities for Winbond Electronics and Posiflex Technology
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Winbond and Posiflex is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Winbond Electronics Corp and Posiflex Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posiflex Technology 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 Posiflex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posiflex Technology has no effect on the direction of Winbond Electronics i.e., Winbond Electronics and Posiflex Technology go up and down completely randomly.
Pair Corralation between Winbond Electronics and Posiflex Technology
Assuming the 90 days trading horizon Winbond Electronics Corp is expected to under-perform the Posiflex Technology. But the stock apears to be less risky and, when comparing its historical volatility, Winbond Electronics Corp is 1.8 times less risky than Posiflex Technology. The stock trades about -0.39 of its potential returns per unit of risk. The Posiflex Technology is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 20,950 in Posiflex Technology on August 31, 2024 and sell it today you would earn a total of 10,400 from holding Posiflex Technology or generate 49.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winbond Electronics Corp vs. Posiflex Technology
Performance |
| Timeline |
| Winbond Electronics Corp |
| Posiflex Technology |
Winbond Electronics and Posiflex Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winbond Electronics and Posiflex Technology
The main advantage of trading using opposite Winbond Electronics and Posiflex Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winbond Electronics position performs unexpectedly, Posiflex Technology 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 Posiflex Technology will offset losses from the drop in Posiflex Technology'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 |
| Posiflex Technology vs. United Microelectronics | Posiflex Technology vs. Winbond Electronics Corp | Posiflex Technology vs. Macronix International 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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