Correlation Between Chi Sheng and Wistron NeWeb
Can any of the company-specific risk be diversified away by investing in both Chi Sheng and Wistron NeWeb 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 Chi Sheng and Wistron NeWeb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Sheng Chemical and Wistron NeWeb Corp, you can compare the effects of market volatilities on Chi Sheng and Wistron NeWeb 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 Chi Sheng with a short position of Wistron NeWeb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Sheng and Wistron NeWeb.
Diversification Opportunities for Chi Sheng and Wistron NeWeb
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chi and Wistron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chi Sheng Chemical and Wistron NeWeb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron NeWeb Corp and Chi Sheng 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 Chi Sheng Chemical are associated (or correlated) with Wistron NeWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron NeWeb Corp has no effect on the direction of Chi Sheng i.e., Chi Sheng and Wistron NeWeb go up and down completely randomly.
Pair Corralation between Chi Sheng and Wistron NeWeb
Assuming the 90 days trading horizon Chi Sheng is expected to generate 2.26 times less return on investment than Wistron NeWeb. But when comparing it to its historical volatility, Chi Sheng Chemical is 1.31 times less risky than Wistron NeWeb. It trades about 0.02 of its potential returns per unit of risk. Wistron NeWeb Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,160 in Wistron NeWeb Corp on August 26, 2024 and sell it today you would earn a total of 2,190 from holding Wistron NeWeb Corp or generate 23.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Sheng Chemical vs. Wistron NeWeb Corp
Performance |
| Timeline |
| Chi Sheng Chemical |
| Wistron NeWeb Corp |
Chi Sheng and Wistron NeWeb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Sheng and Wistron NeWeb
The main advantage of trading using opposite Chi Sheng and Wistron NeWeb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Sheng position performs unexpectedly, Wistron NeWeb 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 Wistron NeWeb will offset losses from the drop in Wistron NeWeb's long position.| Chi Sheng vs. StShine Optical Co | Chi Sheng vs. Bioteque | Chi Sheng vs. Medeon Biodesign | Chi Sheng vs. SciVision Biotech |
| Wistron NeWeb vs. Jinan Acetate Chemical | Wistron NeWeb vs. Taiwan Speciality Chemicals | Wistron NeWeb vs. Chi Sheng Chemical | Wistron NeWeb vs. Feng Ching Metal |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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