Correlation Between King Yuan and Wistron Corp
Can any of the company-specific risk be diversified away by investing in both King Yuan and Wistron Corp 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 King Yuan and Wistron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between King Yuan Electronics and Wistron Corp, you can compare the effects of market volatilities on King Yuan and Wistron Corp 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 King Yuan with a short position of Wistron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of King Yuan and Wistron Corp.
Diversification Opportunities for King Yuan and Wistron Corp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between King and Wistron is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding King Yuan Electronics and Wistron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Corp and King Yuan 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 King Yuan Electronics are associated (or correlated) with Wistron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Corp has no effect on the direction of King Yuan i.e., King Yuan and Wistron Corp go up and down completely randomly.
Pair Corralation between King Yuan and Wistron Corp
Assuming the 90 days trading horizon King Yuan Electronics is expected to generate 1.2 times more return on investment than Wistron Corp. However, King Yuan is 1.2 times more volatile than Wistron Corp. It trades about 0.07 of its potential returns per unit of risk. Wistron Corp is currently generating about 0.06 per unit of risk. If you would invest 8,420 in King Yuan Electronics on August 29, 2024 and sell it today you would earn a total of 4,130 from holding King Yuan Electronics or generate 49.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
King Yuan Electronics vs. Wistron Corp
Performance |
| Timeline |
| King Yuan Electronics |
| Wistron Corp |
King Yuan and Wistron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with King Yuan and Wistron Corp
The main advantage of trading using opposite King Yuan and Wistron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Yuan position performs unexpectedly, Wistron Corp 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 Corp will offset losses from the drop in Wistron Corp's long position.| King Yuan vs. Powertech Technology | King Yuan vs. Novatek Microelectronics Corp | King Yuan vs. Greatek Electronics | King Yuan vs. Nanya Technology Corp |
| Wistron Corp vs. Pegatron Corp | Wistron Corp vs. Quanta Computer | Wistron Corp vs. Compal Electronics | Wistron Corp vs. Inventec 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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