Correlation Between Innolux Corp and Weikeng Industrial
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Weikeng Industrial 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 Innolux Corp and Weikeng Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Weikeng Industrial Co, you can compare the effects of market volatilities on Innolux Corp and Weikeng Industrial 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 Innolux Corp with a short position of Weikeng Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Weikeng Industrial.
Diversification Opportunities for Innolux Corp and Weikeng Industrial
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innolux and Weikeng is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Weikeng Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weikeng Industrial and Innolux 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 Innolux Corp are associated (or correlated) with Weikeng Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weikeng Industrial has no effect on the direction of Innolux Corp i.e., Innolux Corp and Weikeng Industrial go up and down completely randomly.
Pair Corralation between Innolux Corp and Weikeng Industrial
Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.6 times more return on investment than Weikeng Industrial. However, Innolux Corp is 1.6 times more volatile than Weikeng Industrial Co. It trades about 0.11 of its potential returns per unit of risk. Weikeng Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 1,485 in Innolux Corp on September 15, 2024 and sell it today you would earn a total of 50.00 from holding Innolux Corp or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Weikeng Industrial Co
Performance |
| Timeline |
| Innolux Corp |
| Weikeng Industrial |
Innolux Corp and Weikeng Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Weikeng Industrial
The main advantage of trading using opposite Innolux Corp and Weikeng Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Weikeng Industrial 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 Weikeng Industrial will offset losses from the drop in Weikeng Industrial's long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. China Steel Corp | Innolux Corp vs. Hon Hai Precision | Innolux Corp vs. Delta Electronics |
| Weikeng Industrial vs. AU Optronics | Weikeng Industrial vs. Innolux Corp | Weikeng Industrial vs. Ruentex Development Co | Weikeng Industrial vs. WiseChip Semiconductor |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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