Correlation Between Ingentec and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Ingentec and Wei Chuan 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 Ingentec and Wei Chuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingentec and Wei Chuan Foods, you can compare the effects of market volatilities on Ingentec and Wei Chuan 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 Ingentec with a short position of Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingentec and Wei Chuan.
Diversification Opportunities for Ingentec and Wei Chuan
Good diversification
The 3 months correlation between Ingentec and Wei is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods and Ingentec 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 Ingentec are associated (or correlated) with Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Ingentec i.e., Ingentec and Wei Chuan go up and down completely randomly.
Pair Corralation between Ingentec and Wei Chuan
Assuming the 90 days trading horizon Ingentec is expected to generate 4.55 times more return on investment than Wei Chuan. However, Ingentec is 4.55 times more volatile than Wei Chuan Foods. It trades about 0.04 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about -0.01 per unit of risk. If you would invest 13,480 in Ingentec on September 14, 2024 and sell it today you would earn a total of 4,820 from holding Ingentec or generate 35.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingentec vs. Wei Chuan Foods
Performance |
| Timeline |
| Ingentec |
| Wei Chuan Foods |
Ingentec and Wei Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingentec and Wei Chuan
The main advantage of trading using opposite Ingentec and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingentec position performs unexpectedly, Wei Chuan 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 Chuan will offset losses from the drop in Wei Chuan's long position.| Ingentec vs. Wei Chuan Foods | Ingentec vs. RiTdisplay Corp | Ingentec vs. Fortune Information Systems | Ingentec vs. Wistron Information Technology |
| Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Taisun Enterprise Co | Wei Chuan vs. AGV Products Corp | Wei Chuan vs. Great Wall Enterprise |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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