Correlation Between Wistron Corp and Nanya Technology
Can any of the company-specific risk be diversified away by investing in both Wistron Corp and Nanya Technology 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 Wistron Corp and Nanya Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wistron Corp and Nanya Technology Corp, you can compare the effects of market volatilities on Wistron Corp and Nanya Technology 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 Wistron Corp with a short position of Nanya Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Corp and Nanya Technology.
Diversification Opportunities for Wistron Corp and Nanya Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wistron and Nanya is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Corp and Nanya Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanya Technology Corp and Wistron Corp 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 Wistron Corp are associated (or correlated) with Nanya Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanya Technology Corp has no effect on the direction of Wistron Corp i.e., Wistron Corp and Nanya Technology go up and down completely randomly.
Pair Corralation between Wistron Corp and Nanya Technology
Assuming the 90 days trading horizon Wistron Corp is expected to generate 6.11 times less return on investment than Nanya Technology. But when comparing it to its historical volatility, Wistron Corp is 1.54 times less risky than Nanya Technology. It trades about 0.1 of its potential returns per unit of risk. Nanya Technology Corp is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 3,000 in Nanya Technology Corp on November 22, 2024 and sell it today you would earn a total of 915.00 from holding Nanya Technology Corp or generate 30.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wistron Corp vs. Nanya Technology Corp
Performance |
| Timeline |
| Wistron Corp |
| Nanya Technology Corp |
Wistron Corp and Nanya Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wistron Corp and Nanya Technology
The main advantage of trading using opposite Wistron Corp and Nanya Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Corp position performs unexpectedly, Nanya Technology 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 Nanya Technology will offset losses from the drop in Nanya Technology's long position.| Wistron Corp vs. Pegatron Corp | Wistron Corp vs. Quanta Computer | Wistron Corp vs. Compal Electronics | Wistron Corp vs. Inventec Corp |
| Nanya Technology vs. Winbond Electronics Corp | Nanya Technology vs. AU Optronics | Nanya Technology vs. Macronix International Co | Nanya Technology vs. United Microelectronics |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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