Correlation Between Walsin Technology and Weltrend Semiconductor
Can any of the company-specific risk be diversified away by investing in both Walsin Technology and Weltrend Semiconductor 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 Walsin Technology and Weltrend Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walsin Technology Corp and Weltrend Semiconductor, you can compare the effects of market volatilities on Walsin Technology and Weltrend Semiconductor 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 Walsin Technology with a short position of Weltrend Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Technology and Weltrend Semiconductor.
Diversification Opportunities for Walsin Technology and Weltrend Semiconductor
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walsin and Weltrend is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Technology Corp and Weltrend Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weltrend Semiconductor and Walsin Technology 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 Walsin Technology Corp are associated (or correlated) with Weltrend Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weltrend Semiconductor has no effect on the direction of Walsin Technology i.e., Walsin Technology and Weltrend Semiconductor go up and down completely randomly.
Pair Corralation between Walsin Technology and Weltrend Semiconductor
Assuming the 90 days trading horizon Walsin Technology Corp is expected to under-perform the Weltrend Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Walsin Technology Corp is 1.58 times less risky than Weltrend Semiconductor. The stock trades about -0.06 of its potential returns per unit of risk. The Weltrend Semiconductor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,450 in Weltrend Semiconductor on October 26, 2024 and sell it today you would earn a total of 60.00 from holding Weltrend Semiconductor or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walsin Technology Corp vs. Weltrend Semiconductor
Performance |
| Timeline |
| Walsin Technology Corp |
| Weltrend Semiconductor |
Walsin Technology and Weltrend Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Technology and Weltrend Semiconductor
The main advantage of trading using opposite Walsin Technology and Weltrend Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Technology position performs unexpectedly, Weltrend Semiconductor 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 Weltrend Semiconductor will offset losses from the drop in Weltrend Semiconductor's long position.| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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