Correlation Between WT Microelectronics and Loop Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both WT Microelectronics and Loop Telecommunicatio 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 WT Microelectronics and Loop Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT Microelectronics Co and Loop Telecommunication International, you can compare the effects of market volatilities on WT Microelectronics and Loop Telecommunicatio 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 WT Microelectronics with a short position of Loop Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Microelectronics and Loop Telecommunicatio.
Diversification Opportunities for WT Microelectronics and Loop Telecommunicatio
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3036A and Loop is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding WT Microelectronics Co and Loop Telecommunication Interna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Telecommunication and WT Microelectronics 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 WT Microelectronics Co are associated (or correlated) with Loop Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Telecommunication has no effect on the direction of WT Microelectronics i.e., WT Microelectronics and Loop Telecommunicatio go up and down completely randomly.
Pair Corralation between WT Microelectronics and Loop Telecommunicatio
Assuming the 90 days trading horizon WT Microelectronics Co is expected to generate 0.02 times more return on investment than Loop Telecommunicatio. However, WT Microelectronics Co is 42.9 times less risky than Loop Telecommunicatio. It trades about 0.43 of its potential returns per unit of risk. Loop Telecommunication International is currently generating about -0.04 per unit of risk. If you would invest 4,945 in WT Microelectronics Co on October 26, 2024 and sell it today you would earn a total of 75.00 from holding WT Microelectronics Co or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT Microelectronics Co vs. Loop Telecommunication Interna
Performance |
| Timeline |
| WT Microelectronics |
| Loop Telecommunication |
WT Microelectronics and Loop Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Microelectronics and Loop Telecommunicatio
The main advantage of trading using opposite WT Microelectronics and Loop Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Microelectronics position performs unexpectedly, Loop Telecommunicatio 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 Loop Telecommunicatio will offset losses from the drop in Loop Telecommunicatio's long position.| WT Microelectronics vs. Grand Plastic Technology | WT Microelectronics vs. First Insurance Co | WT Microelectronics vs. Cathay Financial Holding | WT Microelectronics vs. CTBC Financial Holding |
| Loop Telecommunicatio vs. Edimax Technology Co | Loop Telecommunicatio vs. Billion Electric Co | Loop Telecommunicatio vs. CyberTAN Technology | Loop Telecommunicatio vs. Emerging Display Technologies |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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