Correlation Between Wistron Information and Ichia Technologies
Can any of the company-specific risk be diversified away by investing in both Wistron Information and Ichia Technologies 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 Wistron Information and Ichia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wistron Information Technology and Ichia Technologies, you can compare the effects of market volatilities on Wistron Information and Ichia Technologies 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 Wistron Information with a short position of Ichia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Information and Ichia Technologies.
Diversification Opportunities for Wistron Information and Ichia Technologies
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wistron and Ichia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Information Technology and Ichia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichia Technologies and Wistron 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 Wistron Information Technology are associated (or correlated) with Ichia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichia Technologies has no effect on the direction of Wistron Information i.e., Wistron Information and Ichia Technologies go up and down completely randomly.
Pair Corralation between Wistron Information and Ichia Technologies
Assuming the 90 days trading horizon Wistron Information Technology is expected to under-perform the Ichia Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Wistron Information Technology is 1.6 times less risky than Ichia Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Ichia Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,580 in Ichia Technologies on September 1, 2024 and sell it today you would earn a total of 560.00 from holding Ichia Technologies or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wistron Information Technology vs. Ichia Technologies
Performance |
| Timeline |
| Wistron Information |
| Ichia Technologies |
Wistron Information and Ichia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wistron Information and Ichia Technologies
The main advantage of trading using opposite Wistron Information and Ichia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Information position performs unexpectedly, Ichia Technologies 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 Ichia Technologies will offset losses from the drop in Ichia Technologies' long position.| Wistron Information vs. Acer E Enabling Service | Wistron Information vs. Green World Fintech | Wistron Information vs. Genesis Technology | Wistron Information vs. Syscom Computer Engineering |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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