Correlation Between Wistron Corp and King Yuan
Can any of the company-specific risk be diversified away by investing in both Wistron Corp and King Yuan 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 King Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wistron Corp and King Yuan Electronics, you can compare the effects of market volatilities on Wistron Corp and King Yuan 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 King Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Corp and King Yuan.
Diversification Opportunities for Wistron Corp and King Yuan
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wistron and King is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Corp and King Yuan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Yuan Electronics 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 King Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Yuan Electronics has no effect on the direction of Wistron Corp i.e., Wistron Corp and King Yuan go up and down completely randomly.
Pair Corralation between Wistron Corp and King Yuan
Assuming the 90 days trading horizon Wistron Corp is expected to generate 1.2 times more return on investment than King Yuan. However, Wistron Corp is 1.2 times more volatile than King Yuan Electronics. It trades about 0.05 of its potential returns per unit of risk. King Yuan Electronics is currently generating about 0.03 per unit of risk. If you would invest 11,100 in Wistron Corp on September 1, 2024 and sell it today you would earn a total of 250.00 from holding Wistron Corp or generate 2.25% 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. King Yuan Electronics
Performance |
| Timeline |
| Wistron Corp |
| King Yuan Electronics |
Wistron Corp and King Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wistron Corp and King Yuan
The main advantage of trading using opposite Wistron Corp and King Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Corp position performs unexpectedly, King Yuan 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 King Yuan will offset losses from the drop in King Yuan's long position.| Wistron Corp vs. Pegatron Corp | Wistron Corp vs. Quanta Computer | Wistron Corp vs. Compal Electronics | Wistron Corp vs. Inventec 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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