Correlation Between Wistron Information and Digital China
Can any of the company-specific risk be diversified away by investing in both Wistron Information and Digital China 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 Digital China 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 Digital China Holdings, you can compare the effects of market volatilities on Wistron Information and Digital China 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 Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron Information and Digital China.
Diversification Opportunities for Wistron Information and Digital China
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wistron and Digital is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Information Technology and Digital China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Holdings 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 Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Holdings has no effect on the direction of Wistron Information i.e., Wistron Information and Digital China go up and down completely randomly.
Pair Corralation between Wistron Information and Digital China
Assuming the 90 days trading horizon Wistron Information Technology is expected to under-perform the Digital China. But the stock apears to be less risky and, when comparing its historical volatility, Wistron Information Technology is 1.91 times less risky than Digital China. The stock trades about -0.13 of its potential returns per unit of risk. The Digital China Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 579.00 in Digital China Holdings on August 28, 2024 and sell it today you would earn a total of 84.00 from holding Digital China Holdings or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wistron Information Technology vs. Digital China Holdings
Performance |
| Timeline |
| Wistron Information |
| Digital China Holdings |
Wistron Information and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wistron Information and Digital China
The main advantage of trading using opposite Wistron Information and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron Information position performs unexpectedly, Digital China 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 Digital China will offset losses from the drop in Digital China's long position.| Wistron Information vs. Acer E Enabling Service | Wistron Information vs. Sysage Technology Co | Wistron Information vs. Syscom Computer Engineering | Wistron Information vs. Jetwell Computer Co |
| Digital China vs. Acer E Enabling Service | Digital China vs. Sysage Technology Co | Digital China vs. Syscom Computer Engineering | Digital China vs. Jetwell Computer Co |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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