Correlation Between WiseChip Semiconductor and Merida Industry
Can any of the company-specific risk be diversified away by investing in both WiseChip Semiconductor and Merida Industry 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 Merida Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseChip Semiconductor and Merida Industry Co, you can compare the effects of market volatilities on WiseChip Semiconductor and Merida Industry 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 Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseChip Semiconductor and Merida Industry.
Diversification Opportunities for WiseChip Semiconductor and Merida Industry
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WiseChip and Merida is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding WiseChip Semiconductor and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry 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 Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of WiseChip Semiconductor i.e., WiseChip Semiconductor and Merida Industry go up and down completely randomly.
Pair Corralation between WiseChip Semiconductor and Merida Industry
Assuming the 90 days trading horizon WiseChip Semiconductor is expected to generate 1.13 times more return on investment than Merida Industry. However, WiseChip Semiconductor is 1.13 times more volatile than Merida Industry Co. It trades about 0.07 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.14 per unit of risk. If you would invest 2,890 in WiseChip Semiconductor on September 5, 2024 and sell it today you would earn a total of 415.00 from holding WiseChip Semiconductor or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.82% |
| Values | Daily Returns |
WiseChip Semiconductor vs. Merida Industry Co
Performance |
| Timeline |
| WiseChip Semiconductor |
| Merida Industry |
WiseChip Semiconductor and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseChip Semiconductor and Merida Industry
The main advantage of trading using opposite WiseChip Semiconductor and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseChip Semiconductor position performs unexpectedly, Merida Industry 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 Merida Industry will offset losses from the drop in Merida Industry's long position.| WiseChip Semiconductor vs. Taiwan Semiconductor Manufacturing | WiseChip Semiconductor vs. Yang Ming Marine | WiseChip Semiconductor vs. AU Optronics | WiseChip Semiconductor vs. Nan Ya Plastics |
| Merida Industry vs. Tainan Spinning Co | Merida Industry vs. Chia Her Industrial | Merida Industry vs. WiseChip Semiconductor | Merida Industry vs. Novatek Microelectronics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |