Correlation Between Wafer Works and Motech Industries
Can any of the company-specific risk be diversified away by investing in both Wafer Works and Motech Industries 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 Motech Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wafer Works and Motech Industries Co, you can compare the effects of market volatilities on Wafer Works and Motech Industries 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 Motech Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and Motech Industries.
Diversification Opportunities for Wafer Works and Motech Industries
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wafer and Motech is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and Motech Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motech Industries 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 Motech Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motech Industries has no effect on the direction of Wafer Works i.e., Wafer Works and Motech Industries go up and down completely randomly.
Pair Corralation between Wafer Works and Motech Industries
Assuming the 90 days trading horizon Wafer Works is expected to under-perform the Motech Industries. But the stock apears to be less risky and, when comparing its historical volatility, Wafer Works is 1.45 times less risky than Motech Industries. The stock trades about -0.03 of its potential returns per unit of risk. The Motech Industries Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,930 in Motech Industries Co on August 30, 2024 and sell it today you would lose (480.00) from holding Motech Industries Co or give up 16.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wafer Works vs. Motech Industries Co
Performance |
| Timeline |
| Wafer Works |
| Motech Industries |
Wafer Works and Motech Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and Motech Industries
The main advantage of trading using opposite Wafer Works and Motech Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works position performs unexpectedly, Motech Industries 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 Motech Industries will offset losses from the drop in Motech Industries' 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 |
| Motech Industries vs. United Renewable Energy | Motech Industries vs. Sino American Silicon Products | Motech Industries vs. Wafer Works | Motech Industries vs. Gigasolar Materials |
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 CEOs Directory module to screen CEOs from public companies around the world.
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