Correlation Between Gigastorage Corp and Wistron Information
Can any of the company-specific risk be diversified away by investing in both Gigastorage Corp and Wistron Information 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 Gigastorage Corp and Wistron Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gigastorage Corp and Wistron Information Technology, you can compare the effects of market volatilities on Gigastorage Corp and Wistron Information 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 Gigastorage Corp with a short position of Wistron Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gigastorage Corp and Wistron Information.
Diversification Opportunities for Gigastorage Corp and Wistron Information
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gigastorage and Wistron is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gigastorage Corp and Wistron Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Information and Gigastorage Corp 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 Gigastorage Corp are associated (or correlated) with Wistron Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Information has no effect on the direction of Gigastorage Corp i.e., Gigastorage Corp and Wistron Information go up and down completely randomly.
Pair Corralation between Gigastorage Corp and Wistron Information
Assuming the 90 days trading horizon Gigastorage Corp is expected to generate 0.96 times more return on investment than Wistron Information. However, Gigastorage Corp is 1.04 times less risky than Wistron Information. It trades about -0.16 of its potential returns per unit of risk. Wistron Information Technology is currently generating about -0.18 per unit of risk. If you would invest 1,470 in Gigastorage Corp on November 3, 2024 and sell it today you would lose (95.00) from holding Gigastorage Corp or give up 6.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gigastorage Corp vs. Wistron Information Technology
Performance |
| Timeline |
| Gigastorage Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wistron Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Gigastorage Corp and Wistron Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gigastorage Corp and Wistron Information
The main advantage of trading using opposite Gigastorage Corp and Wistron Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gigastorage Corp position performs unexpectedly, Wistron Information 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 Wistron Information will offset losses from the drop in Wistron Information's long position.The idea behind Gigastorage Corp and Wistron Information Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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