Correlation Between Merry Electronics and Walsin Technology
Can any of the company-specific risk be diversified away by investing in both Merry Electronics and Walsin 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 Merry Electronics and Walsin Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merry Electronics Co and Walsin Technology Corp, you can compare the effects of market volatilities on Merry Electronics and Walsin 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 Merry Electronics with a short position of Walsin Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merry Electronics and Walsin Technology.
Diversification Opportunities for Merry Electronics and Walsin Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merry and Walsin is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Merry Electronics Co and Walsin Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Technology Corp and Merry 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 Merry Electronics Co are associated (or correlated) with Walsin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Technology Corp has no effect on the direction of Merry Electronics i.e., Merry Electronics and Walsin Technology go up and down completely randomly.
Pair Corralation between Merry Electronics and Walsin Technology
Assuming the 90 days trading horizon Merry Electronics Co is expected to generate 1.15 times more return on investment than Walsin Technology. However, Merry Electronics is 1.15 times more volatile than Walsin Technology Corp. It trades about 0.0 of its potential returns per unit of risk. Walsin Technology Corp is currently generating about -0.2 per unit of risk. If you would invest 10,650 in Merry Electronics Co on September 2, 2024 and sell it today you would lose (50.00) from holding Merry Electronics Co or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merry Electronics Co vs. Walsin Technology Corp
Performance |
| Timeline |
| Merry Electronics |
| Walsin Technology Corp |
Merry Electronics and Walsin Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merry Electronics and Walsin Technology
The main advantage of trading using opposite Merry Electronics and Walsin Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merry Electronics position performs unexpectedly, Walsin 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 Walsin Technology will offset losses from the drop in Walsin Technology's long position.| Merry Electronics vs. Asia Metal Industries | Merry Electronics vs. Chunghwa Telecom Co | Merry Electronics vs. Oceanic Beverages Co | Merry Electronics vs. Chief Telecom |
| Walsin Technology vs. Yageo Corp | Walsin Technology vs. Nanya Technology Corp | Walsin Technology vs. Holy Stone Enterprise | Walsin Technology vs. Novatek Microelectronics 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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