Correlation Between Chicony Electronics and WT Microelectronics
Can any of the company-specific risk be diversified away by investing in both Chicony Electronics and WT Microelectronics 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 Chicony Electronics and WT Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chicony Electronics Co and WT Microelectronics Co, you can compare the effects of market volatilities on Chicony Electronics and WT Microelectronics 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 Chicony Electronics with a short position of WT Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicony Electronics and WT Microelectronics.
Diversification Opportunities for Chicony Electronics and WT Microelectronics
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chicony and 3036A is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Electronics Co and WT Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Microelectronics and Chicony 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 Chicony Electronics Co are associated (or correlated) with WT Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Microelectronics has no effect on the direction of Chicony Electronics i.e., Chicony Electronics and WT Microelectronics go up and down completely randomly.
Pair Corralation between Chicony Electronics and WT Microelectronics
Assuming the 90 days trading horizon Chicony Electronics Co is expected to generate 11.95 times more return on investment than WT Microelectronics. However, Chicony Electronics is 11.95 times more volatile than WT Microelectronics Co. It trades about 0.16 of its potential returns per unit of risk. WT Microelectronics Co is currently generating about 0.19 per unit of risk. If you would invest 15,350 in Chicony Electronics Co on December 14, 2024 and sell it today you would earn a total of 1,550 from holding Chicony Electronics Co or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chicony Electronics Co vs. WT Microelectronics Co
Performance |
| Timeline |
| Chicony Electronics |
| WT Microelectronics |
Chicony Electronics and WT Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chicony Electronics and WT Microelectronics
The main advantage of trading using opposite Chicony Electronics and WT Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicony Electronics position performs unexpectedly, WT Microelectronics 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 WT Microelectronics will offset losses from the drop in WT Microelectronics' long position.| Chicony Electronics vs. Lite On Technology Corp | ||
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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