Correlation Between Wafer Works and StShine Optical
Can any of the company-specific risk be diversified away by investing in both Wafer Works and StShine Optical 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 Wafer Works and StShine Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wafer Works and StShine Optical Co, you can compare the effects of market volatilities on Wafer Works and StShine Optical 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 Wafer Works with a short position of StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and StShine Optical.
Diversification Opportunities for Wafer Works and StShine Optical
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wafer and StShine is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and Wafer Works 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 Wafer Works are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of Wafer Works i.e., Wafer Works and StShine Optical go up and down completely randomly.
Pair Corralation between Wafer Works and StShine Optical
Assuming the 90 days trading horizon Wafer Works is expected to under-perform the StShine Optical. In addition to that, Wafer Works is 1.22 times more volatile than StShine Optical Co. It trades about -0.08 of its total potential returns per unit of risk. StShine Optical Co is currently generating about 0.02 per unit of volatility. If you would invest 18,604 in StShine Optical Co on December 11, 2024 and sell it today you would earn a total of 946.00 from holding StShine Optical Co or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wafer Works vs. StShine Optical Co
Performance |
| Timeline |
| Wafer Works |
| StShine Optical |
Wafer Works and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and StShine Optical
The main advantage of trading using opposite Wafer Works and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical's long position.| Wafer Works vs. Sino American Silicon Products | ||
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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