Correlation Between Wonderful and Accton Technology
Can any of the company-specific risk be diversified away by investing in both Wonderful and Accton 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 Wonderful and Accton Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonderful Hi Tech Co and Accton Technology Corp, you can compare the effects of market volatilities on Wonderful and Accton 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 Wonderful with a short position of Accton Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonderful and Accton Technology.
Diversification Opportunities for Wonderful and Accton Technology
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wonderful and Accton is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wonderful Hi Tech Co and Accton Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accton Technology Corp and Wonderful 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 Wonderful Hi Tech Co are associated (or correlated) with Accton Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accton Technology Corp has no effect on the direction of Wonderful i.e., Wonderful and Accton Technology go up and down completely randomly.
Pair Corralation between Wonderful and Accton Technology
Assuming the 90 days trading horizon Wonderful Hi Tech Co is expected to generate 0.36 times more return on investment than Accton Technology. However, Wonderful Hi Tech Co is 2.77 times less risky than Accton Technology. It trades about 0.84 of its potential returns per unit of risk. Accton Technology Corp is currently generating about -0.01 per unit of risk. If you would invest 3,375 in Wonderful Hi Tech Co on November 27, 2024 and sell it today you would earn a total of 515.00 from holding Wonderful Hi Tech Co or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonderful Hi Tech Co vs. Accton Technology Corp
Performance |
| Timeline |
| Wonderful Hi Tech |
| Accton Technology Corp |
Wonderful and Accton Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonderful and Accton Technology
The main advantage of trading using opposite Wonderful and Accton Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonderful position performs unexpectedly, Accton 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 Accton Technology will offset losses from the drop in Accton Technology's long position.| Wonderful vs. Standard Chemical Pharmaceutical | Wonderful vs. China Times Publishing | Wonderful vs. Landis Taipei Hotel | Wonderful vs. Ambassador Hotel |
| Accton Technology vs. D Link Corp | Accton Technology vs. Realtek Semiconductor Corp | Accton Technology vs. Winbond Electronics Corp | Accton Technology vs. Compal Electronics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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