Correlation Between WiseChip Semiconductor and Lung Hwa
Can any of the company-specific risk be diversified away by investing in both WiseChip Semiconductor and Lung Hwa 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 WiseChip Semiconductor and Lung Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseChip Semiconductor and Lung Hwa Electronics, you can compare the effects of market volatilities on WiseChip Semiconductor and Lung Hwa 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 WiseChip Semiconductor with a short position of Lung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseChip Semiconductor and Lung Hwa.
Diversification Opportunities for WiseChip Semiconductor and Lung Hwa
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WiseChip and Lung is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Lung Hwa Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lung Hwa Electronics and WiseChip Semiconductor 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 WiseChip Semiconductor are associated (or correlated) with Lung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lung Hwa Electronics has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Lung Hwa go up and down completely randomly.
Pair Corralation between WiseChip Semiconductor and Lung Hwa
Assuming the 90 days trading horizon WiseChip Semiconductor is expected to under-perform the Lung Hwa. But the stock apears to be less risky and, when comparing its historical volatility, WiseChip Semiconductor is 1.77 times less risky than Lung Hwa. The stock trades about -0.04 of its potential returns per unit of risk. The Lung Hwa Electronics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,065 in Lung Hwa Electronics on September 4, 2024 and sell it today you would earn a total of 4,875 from holding Lung Hwa Electronics or generate 236.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseChip Semiconductor vs. Lung Hwa Electronics
Performance |
| Timeline |
| WiseChip Semiconductor |
| Lung Hwa Electronics |
WiseChip Semiconductor and Lung Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseChip Semiconductor and Lung Hwa
The main advantage of trading using opposite WiseChip Semiconductor and Lung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseChip Semiconductor position performs unexpectedly, Lung Hwa 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 Lung Hwa will offset losses from the drop in Lung Hwa's long position.| WiseChip Semiconductor vs. Taiwan Semiconductor Manufacturing | WiseChip Semiconductor vs. Yang Ming Marine | WiseChip Semiconductor vs. ASE Industrial Holding | WiseChip Semiconductor vs. AU Optronics |
| Lung Hwa vs. Chaintech Technology Corp | Lung Hwa vs. AVerMedia Technologies | Lung Hwa vs. Avision | Lung Hwa vs. Clevo 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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