Correlation Between Walsin Technology and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Walsin Technology and Greatek 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 Walsin Technology and Greatek Electronics 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 Greatek Electronics, you can compare the effects of market volatilities on Walsin Technology and Greatek 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 Walsin Technology with a short position of Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walsin Technology and Greatek Electronics.
Diversification Opportunities for Walsin Technology and Greatek Electronics
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walsin and Greatek is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walsin Technology Corp and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics 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 Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Walsin Technology i.e., Walsin Technology and Greatek Electronics go up and down completely randomly.
Pair Corralation between Walsin Technology and Greatek Electronics
Assuming the 90 days trading horizon Walsin Technology is expected to generate 1.71 times less return on investment than Greatek Electronics. In addition to that, Walsin Technology is 1.7 times more volatile than Greatek Electronics. It trades about 0.01 of its total potential returns per unit of risk. Greatek Electronics is currently generating about 0.02 per unit of volatility. If you would invest 5,370 in Greatek Electronics on August 31, 2024 and sell it today you would earn a total of 320.00 from holding Greatek Electronics or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Walsin Technology Corp vs. Greatek Electronics
Performance |
| Timeline |
| Walsin Technology Corp |
| Greatek Electronics |
Walsin Technology and Greatek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walsin Technology and Greatek Electronics
The main advantage of trading using opposite Walsin Technology and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walsin Technology position performs unexpectedly, Greatek 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 Greatek Electronics will offset losses from the drop in Greatek Electronics' 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 |
| Greatek Electronics vs. United Microelectronics | Greatek Electronics vs. Winbond Electronics Corp | Greatek Electronics vs. Macronix International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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