Correlation Between Wafer Works and Chipbond Technology
Can any of the company-specific risk be diversified away by investing in both Wafer Works and Chipbond Technology 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 Chipbond Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wafer Works and Chipbond Technology, you can compare the effects of market volatilities on Wafer Works and Chipbond Technology 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 Chipbond Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and Chipbond Technology.
Diversification Opportunities for Wafer Works and Chipbond Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wafer and Chipbond is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and Chipbond Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipbond Technology 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 Chipbond Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipbond Technology has no effect on the direction of Wafer Works i.e., Wafer Works and Chipbond Technology go up and down completely randomly.
Pair Corralation between Wafer Works and Chipbond Technology
Assuming the 90 days trading horizon Wafer Works is expected to under-perform the Chipbond Technology. In addition to that, Wafer Works is 1.18 times more volatile than Chipbond Technology. It trades about -0.04 of its total potential returns per unit of risk. Chipbond Technology is currently generating about 0.02 per unit of volatility. If you would invest 5,900 in Chipbond Technology on September 4, 2024 and sell it today you would earn a total of 470.00 from holding Chipbond Technology or generate 7.97% 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. Chipbond Technology
Performance |
| Timeline |
| Wafer Works |
| Chipbond Technology |
Wafer Works and Chipbond Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and Chipbond Technology
The main advantage of trading using opposite Wafer Works and Chipbond Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works position performs unexpectedly, Chipbond Technology 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 Chipbond Technology will offset losses from the drop in Chipbond Technology's long position.| Wafer Works vs. Taiwan Semiconductor Manufacturing | Wafer Works vs. Yang Ming Marine | Wafer Works vs. AU Optronics | Wafer Works vs. Innolux 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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