Correlation Between Xintec and Wei Chih
Can any of the company-specific risk be diversified away by investing in both Xintec and Wei Chih 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 Xintec and Wei Chih into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xintec and Wei Chih Steel, you can compare the effects of market volatilities on Xintec and Wei Chih 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 Xintec with a short position of Wei Chih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xintec and Wei Chih.
Diversification Opportunities for Xintec and Wei Chih
Modest diversification
The 3 months correlation between Xintec and Wei is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Xintec and Wei Chih Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chih Steel and Xintec 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 Xintec are associated (or correlated) with Wei Chih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chih Steel has no effect on the direction of Xintec i.e., Xintec and Wei Chih go up and down completely randomly.
Pair Corralation between Xintec and Wei Chih
Assuming the 90 days trading horizon Xintec is expected to generate 1.56 times more return on investment than Wei Chih. However, Xintec is 1.56 times more volatile than Wei Chih Steel. It trades about 0.05 of its potential returns per unit of risk. Wei Chih Steel is currently generating about 0.0 per unit of risk. If you would invest 13,497 in Xintec on September 12, 2024 and sell it today you would earn a total of 6,503 from holding Xintec or generate 48.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.42% |
| Values | Daily Returns |
Xintec vs. Wei Chih Steel
Performance |
| Timeline |
| Xintec |
| Wei Chih Steel |
Xintec and Wei Chih Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xintec and Wei Chih
The main advantage of trading using opposite Xintec and Wei Chih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xintec position performs unexpectedly, Wei Chih 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 Wei Chih will offset losses from the drop in Wei Chih's long position.| Xintec vs. Wei Chih Steel | Xintec vs. Century Iron And | Xintec vs. Lian Hwa Foods | Xintec vs. Tang Eng Iron |
| Wei Chih vs. Tainan Spinning Co | Wei Chih vs. Lealea Enterprise Co | Wei Chih vs. China Petrochemical Development | Wei Chih vs. Ruentex Development 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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