Correlation Between Wafer Works and King Yuan
Can any of the company-specific risk be diversified away by investing in both Wafer Works and King Yuan 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 King Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wafer Works and King Yuan Electronics, you can compare the effects of market volatilities on Wafer Works and King Yuan 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 King Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and King Yuan.
Diversification Opportunities for Wafer Works and King Yuan
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wafer and King is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and King Yuan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Yuan Electronics 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 King Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Yuan Electronics has no effect on the direction of Wafer Works i.e., Wafer Works and King Yuan go up and down completely randomly.
Pair Corralation between Wafer Works and King Yuan
Assuming the 90 days trading horizon Wafer Works is expected to under-perform the King Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Wafer Works is 1.68 times less risky than King Yuan. The stock trades about -0.08 of its potential returns per unit of risk. The King Yuan Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,800 in King Yuan Electronics on September 12, 2024 and sell it today you would lose (50.00) from holding King Yuan Electronics or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wafer Works vs. King Yuan Electronics
Performance |
| Timeline |
| Wafer Works |
| King Yuan Electronics |
Wafer Works and King Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and King Yuan
The main advantage of trading using opposite Wafer Works and King Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works position performs unexpectedly, King Yuan 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 King Yuan will offset losses from the drop in King Yuan's long position.| Wafer Works vs. Sino American Silicon Products | Wafer Works vs. GlobalWafers Co | Wafer Works vs. Motech Industries Co | Wafer Works vs. Formosa Sumco Technology |
| King Yuan vs. Powertech Technology | King Yuan vs. Novatek Microelectronics Corp | King Yuan vs. Greatek Electronics | King Yuan vs. Nanya Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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