Correlation Between Fortune Information and Wistron Information
Can any of the company-specific risk be diversified away by investing in both Fortune Information 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 Fortune Information and Wistron Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Information Systems and Wistron Information Technology, you can compare the effects of market volatilities on Fortune Information 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 Fortune Information with a short position of Wistron Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Information and Wistron Information.
Diversification Opportunities for Fortune Information and Wistron Information
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortune and Wistron is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Information Systems and Wistron Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Information and Fortune Information 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 Fortune Information Systems 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 Fortune Information i.e., Fortune Information and Wistron Information go up and down completely randomly.
Pair Corralation between Fortune Information and Wistron Information
Assuming the 90 days trading horizon Fortune Information Systems is expected to under-perform the Wistron Information. But the stock apears to be less risky and, when comparing its historical volatility, Fortune Information Systems is 1.3 times less risky than Wistron Information. The stock trades about -0.38 of its potential returns per unit of risk. The Wistron Information Technology is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 11,650 in Wistron Information Technology on August 31, 2024 and sell it today you would lose (750.00) from holding Wistron Information Technology or give up 6.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortune Information Systems vs. Wistron Information Technology
Performance |
| Timeline |
| Fortune Information |
| Wistron Information |
Fortune Information and Wistron Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Information and Wistron Information
The main advantage of trading using opposite Fortune Information and Wistron Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Information 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.| Fortune Information vs. United Microelectronics | Fortune Information vs. Winbond Electronics Corp | Fortune Information vs. Macronix International Co |
| Wistron Information vs. Acer E Enabling Service | Wistron Information vs. Green World Fintech | Wistron Information vs. Genesis Technology | Wistron Information vs. Syscom Computer Engineering |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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