Correlation Between Wafer Works and Taiwan Hopax
Can any of the company-specific risk be diversified away by investing in both Wafer Works and Taiwan Hopax 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 Taiwan Hopax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wafer Works and Taiwan Hopax Chemsistry, you can compare the effects of market volatilities on Wafer Works and Taiwan Hopax 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 Taiwan Hopax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wafer Works and Taiwan Hopax.
Diversification Opportunities for Wafer Works and Taiwan Hopax
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wafer and Taiwan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Wafer Works and Taiwan Hopax Chemsistry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Hopax Chemsistry 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 Taiwan Hopax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Hopax Chemsistry has no effect on the direction of Wafer Works i.e., Wafer Works and Taiwan Hopax go up and down completely randomly.
Pair Corralation between Wafer Works and Taiwan Hopax
Assuming the 90 days trading horizon Wafer Works is expected to under-perform the Taiwan Hopax. In addition to that, Wafer Works is 1.81 times more volatile than Taiwan Hopax Chemsistry. It trades about -0.31 of its total potential returns per unit of risk. Taiwan Hopax Chemsistry is currently generating about -0.11 per unit of volatility. If you would invest 3,855 in Taiwan Hopax Chemsistry on October 28, 2024 and sell it today you would lose (110.00) from holding Taiwan Hopax Chemsistry or give up 2.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wafer Works vs. Taiwan Hopax Chemsistry
Performance |
| Timeline |
| Wafer Works |
| Taiwan Hopax Chemsistry |
Wafer Works and Taiwan Hopax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wafer Works and Taiwan Hopax
The main advantage of trading using opposite Wafer Works and Taiwan Hopax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wafer Works position performs unexpectedly, Taiwan Hopax 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 Taiwan Hopax will offset losses from the drop in Taiwan Hopax'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 |
| Taiwan Hopax vs. Mechema Chemicals Int | Taiwan Hopax vs. Coremax Corp | Taiwan Hopax vs. China Steel Chemical | Taiwan Hopax vs. Wafer Works |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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