Correlation Between WT Microelectronics and Chialin Precision
Can any of the company-specific risk be diversified away by investing in both WT Microelectronics and Chialin Precision 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 Chialin Precision 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 Chialin Precision Industrial, you can compare the effects of market volatilities on WT Microelectronics and Chialin Precision 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 Chialin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Microelectronics and Chialin Precision.
Diversification Opportunities for WT Microelectronics and Chialin Precision
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 3036A and Chialin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WT Microelectronics Co and Chialin Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chialin Precision 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 Chialin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chialin Precision has no effect on the direction of WT Microelectronics i.e., WT Microelectronics and Chialin Precision go up and down completely randomly.
Pair Corralation between WT Microelectronics and Chialin Precision
Assuming the 90 days trading horizon WT Microelectronics Co is expected to generate 0.08 times more return on investment than Chialin Precision. However, WT Microelectronics Co is 13.17 times less risky than Chialin Precision. It trades about 0.66 of its potential returns per unit of risk. Chialin Precision Industrial is currently generating about -0.03 per unit of risk. If you would invest 4,960 in WT Microelectronics Co on October 24, 2024 and sell it today you would earn a total of 60.00 from holding WT Microelectronics Co or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT Microelectronics Co vs. Chialin Precision Industrial
Performance |
| Timeline |
| WT Microelectronics |
| Chialin Precision |
WT Microelectronics and Chialin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Microelectronics and Chialin Precision
The main advantage of trading using opposite WT Microelectronics and Chialin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Microelectronics position performs unexpectedly, Chialin Precision 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 Chialin Precision will offset losses from the drop in Chialin Precision's long position.| WT Microelectronics vs. MedFirst Healthcare Services | WT Microelectronics vs. Johnson Health Tech | WT Microelectronics vs. Golden Biotechnology | WT Microelectronics vs. Medigen Biotechnology |
| Chialin Precision vs. Taiwan Chinsan Electronic | Chialin Precision vs. WT Microelectronics Co | Chialin Precision vs. Sea Sonic Electronics | Chialin Precision vs. Grand Ocean Retail |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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