Correlation Between Wistron Information and Cameo Communications
Can any of the company-specific risk be diversified away by investing in both Wistron Information and Cameo Communications 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 Cameo Communications 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 Cameo Communications, you can compare the effects of market volatilities on Wistron Information and Cameo Communications 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 Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Information and Cameo Communications.
Diversification Opportunities for Wistron Information and Cameo Communications
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wistron and Cameo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Information Technology and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications 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 Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Wistron Information i.e., Wistron Information and Cameo Communications go up and down completely randomly.
Pair Corralation between Wistron Information and Cameo Communications
Assuming the 90 days trading horizon Wistron Information Technology is expected to generate 0.5 times more return on investment than Cameo Communications. However, Wistron Information Technology is 2.01 times less risky than Cameo Communications. It trades about -0.13 of its potential returns per unit of risk. Cameo Communications is currently generating about -0.2 per unit of risk. If you would invest 11,900 in Wistron Information Technology on August 28, 2024 and sell it today you would lose (500.00) from holding Wistron Information Technology or give up 4.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wistron Information Technology vs. Cameo Communications
Performance |
| Timeline |
| Wistron Information |
| Cameo Communications |
Wistron Information and Cameo Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wistron Information and Cameo Communications
The main advantage of trading using opposite Wistron Information and Cameo Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Information position performs unexpectedly, Cameo Communications 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 Cameo Communications will offset losses from the drop in Cameo Communications' long position.| Wistron Information vs. Wistron Corp | Wistron Information vs. Wistron NeWeb Corp | Wistron Information vs. Pegatron Corp | Wistron Information vs. Dimerco Data System |
| Cameo Communications vs. Gemtek Technology Co | Cameo Communications vs. CyberTAN Technology | Cameo Communications vs. Alpha Networks | Cameo Communications vs. D Link 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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