Correlation Between AVer Information and Winbond Electronics
Can any of the company-specific risk be diversified away by investing in both AVer Information and Winbond Electronics 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 AVer Information and Winbond Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVer Information and Winbond Electronics Corp, you can compare the effects of market volatilities on AVer Information and Winbond Electronics 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 AVer Information with a short position of Winbond Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVer Information and Winbond Electronics.
Diversification Opportunities for AVer Information and Winbond Electronics
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AVer and Winbond is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding AVer Information and Winbond Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winbond Electronics Corp and AVer Information 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 AVer Information are associated (or correlated) with Winbond Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winbond Electronics Corp has no effect on the direction of AVer Information i.e., AVer Information and Winbond Electronics go up and down completely randomly.
Pair Corralation between AVer Information and Winbond Electronics
Assuming the 90 days trading horizon AVer Information is expected to generate 1.39 times more return on investment than Winbond Electronics. However, AVer Information is 1.39 times more volatile than Winbond Electronics Corp. It trades about -0.03 of its potential returns per unit of risk. Winbond Electronics Corp is currently generating about -0.11 per unit of risk. If you would invest 5,310 in AVer Information on September 2, 2024 and sell it today you would lose (1,175) from holding AVer Information or give up 22.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVer Information vs. Winbond Electronics Corp
Performance |
| Timeline |
| AVer Information |
| Winbond Electronics Corp |
AVer Information and Winbond Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVer Information and Winbond Electronics
The main advantage of trading using opposite AVer Information and Winbond Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVer Information position performs unexpectedly, Winbond Electronics 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 Winbond Electronics will offset losses from the drop in Winbond Electronics' long position.The idea behind AVer Information and Winbond Electronics Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Winbond Electronics vs. Macronix International Co | Winbond Electronics vs. United Microelectronics | Winbond Electronics vs. Mosel Vitelic | Winbond Electronics vs. Nanya Technology 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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