Correlation Between Weltrend Semiconductor and Harmony Electronics
Can any of the company-specific risk be diversified away by investing in both Weltrend Semiconductor and Harmony Electronics 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 Weltrend Semiconductor and Harmony Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weltrend Semiconductor and Harmony Electronics, you can compare the effects of market volatilities on Weltrend Semiconductor and Harmony Electronics 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 Weltrend Semiconductor with a short position of Harmony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weltrend Semiconductor and Harmony Electronics.
Diversification Opportunities for Weltrend Semiconductor and Harmony Electronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weltrend and Harmony is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Weltrend Semiconductor and Harmony Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Electronics and Weltrend Semiconductor 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 Weltrend Semiconductor are associated (or correlated) with Harmony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Electronics has no effect on the direction of Weltrend Semiconductor i.e., Weltrend Semiconductor and Harmony Electronics go up and down completely randomly.
Pair Corralation between Weltrend Semiconductor and Harmony Electronics
Assuming the 90 days trading horizon Weltrend Semiconductor is expected to under-perform the Harmony Electronics. In addition to that, Weltrend Semiconductor is 1.67 times more volatile than Harmony Electronics. It trades about -0.36 of its total potential returns per unit of risk. Harmony Electronics is currently generating about -0.25 per unit of volatility. If you would invest 3,580 in Harmony Electronics on September 1, 2024 and sell it today you would lose (200.00) from holding Harmony Electronics or give up 5.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weltrend Semiconductor vs. Harmony Electronics
Performance |
| Timeline |
| Weltrend Semiconductor |
| Harmony Electronics |
Weltrend Semiconductor and Harmony Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weltrend Semiconductor and Harmony Electronics
The main advantage of trading using opposite Weltrend Semiconductor and Harmony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weltrend Semiconductor position performs unexpectedly, Harmony Electronics 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 Harmony Electronics will offset losses from the drop in Harmony Electronics' long position.| Weltrend Semiconductor vs. United Microelectronics | Weltrend Semiconductor vs. Winbond Electronics Corp |
| Harmony Electronics vs. CviLux Corp | Harmony Electronics vs. Longwell Co | Harmony Electronics vs. Chipbond Technology | Harmony Electronics vs. Allied Circuit 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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