Correlation Between WiseChip Semiconductor and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both WiseChip Semiconductor and Merry Electronics 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 Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseChip Semiconductor and Merry Electronics Co, you can compare the effects of market volatilities on WiseChip Semiconductor and Merry Electronics 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 Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseChip Semiconductor and Merry Electronics.
Diversification Opportunities for WiseChip Semiconductor and Merry Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WiseChip and Merry is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry 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 Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Merry Electronics go up and down completely randomly.
Pair Corralation between WiseChip Semiconductor and Merry Electronics
Assuming the 90 days trading horizon WiseChip Semiconductor is expected to generate 1.6 times more return on investment than Merry Electronics. However, WiseChip Semiconductor is 1.6 times more volatile than Merry Electronics Co. It trades about 0.04 of its potential returns per unit of risk. Merry Electronics Co is currently generating about 0.04 per unit of risk. If you would invest 3,400 in WiseChip Semiconductor on September 12, 2024 and sell it today you would earn a total of 70.00 from holding WiseChip Semiconductor or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseChip Semiconductor vs. Merry Electronics Co
Performance |
| Timeline |
| WiseChip Semiconductor |
| Merry Electronics |
WiseChip Semiconductor and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseChip Semiconductor and Merry Electronics
The main advantage of trading using opposite WiseChip Semiconductor and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseChip Semiconductor position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.| WiseChip Semiconductor vs. AU Optronics | WiseChip Semiconductor vs. Innolux Corp | WiseChip Semiconductor vs. Ruentex Development Co | WiseChip Semiconductor vs. Novatek Microelectronics Corp |
| Merry Electronics vs. AU Optronics | Merry Electronics vs. Innolux Corp | Merry Electronics vs. Ruentex Development Co | Merry Electronics vs. WiseChip Semiconductor |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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