Correlation Between Wafer Works and ALFORMER Industrial
Can any of the company-specific risk be diversified away by investing in both Wafer Works and ALFORMER Industrial 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 ALFORMER Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wafer Works and ALFORMER Industrial Co, you can compare the effects of market volatilities on Wafer Works and ALFORMER Industrial 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 ALFORMER Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and ALFORMER Industrial.
Diversification Opportunities for Wafer Works and ALFORMER Industrial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wafer and ALFORMER is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and ALFORMER Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALFORMER Industrial 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 ALFORMER Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALFORMER Industrial has no effect on the direction of Wafer Works i.e., Wafer Works and ALFORMER Industrial go up and down completely randomly.
Pair Corralation between Wafer Works and ALFORMER Industrial
Assuming the 90 days trading horizon Wafer Works is expected to under-perform the ALFORMER Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Wafer Works is 1.26 times less risky than ALFORMER Industrial. The stock trades about -0.24 of its potential returns per unit of risk. The ALFORMER Industrial Co is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 3,240 in ALFORMER Industrial Co on October 29, 2024 and sell it today you would lose (240.00) from holding ALFORMER Industrial Co or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wafer Works vs. ALFORMER Industrial Co
Performance |
| Timeline |
| Wafer Works |
| ALFORMER Industrial |
Wafer Works and ALFORMER Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and ALFORMER Industrial
The main advantage of trading using opposite Wafer Works and ALFORMER Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works position performs unexpectedly, ALFORMER Industrial 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 ALFORMER Industrial will offset losses from the drop in ALFORMER Industrial's long position.| Wafer Works vs. Unimicron Technology Corp | Wafer Works vs. Kinsus Interconnect Technology | Wafer Works vs. Novatek Microelectronics Corp | Wafer Works vs. Delta Electronics |
| ALFORMER Industrial vs. Microelectronics Technology | ALFORMER Industrial vs. Chien Kuo Construction | ALFORMER Industrial vs. United Microelectronics | ALFORMER Industrial vs. Yufo Electronics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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