Correlation Between Wafer Works and Liton Technology
Can any of the company-specific risk be diversified away by investing in both Wafer Works and Liton 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 Liton 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 Liton Technology, you can compare the effects of market volatilities on Wafer Works and Liton 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 Liton Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and Liton Technology.
Diversification Opportunities for Wafer Works and Liton Technology
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wafer and Liton is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and Liton Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liton 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 Liton Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liton Technology has no effect on the direction of Wafer Works i.e., Wafer Works and Liton Technology go up and down completely randomly.
Pair Corralation between Wafer Works and Liton Technology
Assuming the 90 days trading horizon Wafer Works is expected to under-perform the Liton Technology. But the stock apears to be less risky and, when comparing its historical volatility, Wafer Works is 1.28 times less risky than Liton Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Liton Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,980 in Liton Technology on November 28, 2024 and sell it today you would earn a total of 420.00 from holding Liton Technology or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.16% |
| Values | Daily Returns |
Wafer Works vs. Liton Technology
Performance |
| Timeline |
| Wafer Works |
| Liton Technology |
Wafer Works and Liton Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and Liton Technology
The main advantage of trading using opposite Wafer Works and Liton Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works position performs unexpectedly, Liton 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 Liton Technology will offset losses from the drop in Liton Technology'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 |
| Liton Technology vs. Prosperity Dielectrics Co | Liton Technology vs. Lelon Electronics Corp | Liton Technology vs. Wafer Works | Liton Technology vs. INPAQ Technology 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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