Correlation Between Double Bond and Wistron Information
Can any of the company-specific risk be diversified away by investing in both Double Bond and Wistron Information 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 Double Bond and Wistron Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Double Bond Chemical and Wistron Information Technology, you can compare the effects of market volatilities on Double Bond and Wistron Information 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 Double Bond with a short position of Wistron Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Double Bond and Wistron Information.
Diversification Opportunities for Double Bond and Wistron Information
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Double and Wistron is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Double Bond Chemical and Wistron Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Information and Double Bond 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 Double Bond Chemical are associated (or correlated) with Wistron Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Information has no effect on the direction of Double Bond i.e., Double Bond and Wistron Information go up and down completely randomly.
Pair Corralation between Double Bond and Wistron Information
Assuming the 90 days trading horizon Double Bond Chemical is expected to generate 0.83 times more return on investment than Wistron Information. However, Double Bond Chemical is 1.2 times less risky than Wistron Information. It trades about -0.18 of its potential returns per unit of risk. Wistron Information Technology is currently generating about -0.16 per unit of risk. If you would invest 4,560 in Double Bond Chemical on August 30, 2024 and sell it today you would lose (230.00) from holding Double Bond Chemical or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Double Bond Chemical vs. Wistron Information Technology
Performance |
| Timeline |
| Double Bond Chemical |
| Wistron Information |
Double Bond and Wistron Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Double Bond and Wistron Information
The main advantage of trading using opposite Double Bond and Wistron Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Double Bond position performs unexpectedly, Wistron Information 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 Information will offset losses from the drop in Wistron Information's long position.| Double Bond vs. Nantex Industry Co | Double Bond vs. Chong Hong Construction | Double Bond vs. Cleanaway Co | Double Bond vs. Symtek Automation Asia |
| Wistron Information vs. Wistron Corp | Wistron Information vs. Wistron NeWeb Corp | Wistron Information vs. Pegatron Corp | Wistron Information vs. Dimerco Data System |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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