Correlation Between Wistron NeWeb and Far EasTone
Can any of the company-specific risk be diversified away by investing in both Wistron NeWeb and Far EasTone 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 Wistron NeWeb and Far EasTone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wistron NeWeb Corp and Far EasTone Telecommunications, you can compare the effects of market volatilities on Wistron NeWeb and Far EasTone 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 Wistron NeWeb with a short position of Far EasTone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron NeWeb and Far EasTone.
Diversification Opportunities for Wistron NeWeb and Far EasTone
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wistron and Far is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Wistron NeWeb Corp and Far EasTone Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far EasTone Telecomm and Wistron NeWeb 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 Wistron NeWeb Corp are associated (or correlated) with Far EasTone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far EasTone Telecomm has no effect on the direction of Wistron NeWeb i.e., Wistron NeWeb and Far EasTone go up and down completely randomly.
Pair Corralation between Wistron NeWeb and Far EasTone
Assuming the 90 days trading horizon Wistron NeWeb Corp is expected to under-perform the Far EasTone. In addition to that, Wistron NeWeb is 2.23 times more volatile than Far EasTone Telecommunications. It trades about -0.01 of its total potential returns per unit of risk. Far EasTone Telecommunications is currently generating about 0.01 per unit of volatility. If you would invest 8,960 in Far EasTone Telecommunications on September 14, 2024 and sell it today you would earn a total of 20.00 from holding Far EasTone Telecommunications or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wistron NeWeb Corp vs. Far EasTone Telecommunications
Performance |
| Timeline |
| Wistron NeWeb Corp |
| Far EasTone Telecomm |
Wistron NeWeb and Far EasTone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wistron NeWeb and Far EasTone
The main advantage of trading using opposite Wistron NeWeb and Far EasTone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron NeWeb position performs unexpectedly, Far EasTone 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 Far EasTone will offset losses from the drop in Far EasTone's long position.| Wistron NeWeb vs. Far EasTone Telecommunications | Wistron NeWeb vs. Wholetech System Hitech | Wistron NeWeb vs. V Tac Technology Co | Wistron NeWeb vs. Simplo Technology Co |
| Far EasTone vs. Cheng Mei Materials | Far EasTone vs. Lemtech Holdings Co | Far EasTone vs. Chia Chang Co | Far EasTone vs. Ruentex Development 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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