Correlation Between Wonderful and Antec
Can any of the company-specific risk be diversified away by investing in both Wonderful and Antec 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 Antec 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 Antec Inc, you can compare the effects of market volatilities on Wonderful and Antec 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 Antec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonderful and Antec.
Diversification Opportunities for Wonderful and Antec
Poor diversification
The 3 months correlation between Wonderful and Antec is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Wonderful Hi Tech Co and Antec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antec Inc 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 Antec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antec Inc has no effect on the direction of Wonderful i.e., Wonderful and Antec go up and down completely randomly.
Pair Corralation between Wonderful and Antec
Assuming the 90 days trading horizon Wonderful Hi Tech Co is expected to generate 0.43 times more return on investment than Antec. However, Wonderful Hi Tech Co is 2.32 times less risky than Antec. It trades about 0.04 of its potential returns per unit of risk. Antec Inc is currently generating about -0.02 per unit of risk. If you would invest 2,981 in Wonderful Hi Tech Co on September 14, 2024 and sell it today you would earn a total of 529.00 from holding Wonderful Hi Tech Co or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonderful Hi Tech Co vs. Antec Inc
Performance |
| Timeline |
| Wonderful Hi Tech |
| Antec Inc |
Wonderful and Antec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonderful and Antec
The main advantage of trading using opposite Wonderful and Antec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonderful position performs unexpectedly, Antec 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 Antec will offset losses from the drop in Antec's long position.| Wonderful vs. Tang Eng Iron | Wonderful vs. Forest Water Environmental | Wonderful vs. Taiwan Speciality Chemicals | Wonderful vs. Mayer Steel Pipe |
| Antec vs. Tai Tung Communication | Antec vs. Wonderful Hi Tech Co | Antec vs. BenQ Medical Technology | Antec vs. Asustek Computer |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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