Correlation Between Wistron NeWeb and U Media
Can any of the company-specific risk be diversified away by investing in both Wistron NeWeb and U Media 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 U Media 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 U Media Communications, you can compare the effects of market volatilities on Wistron NeWeb and U Media 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 U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron NeWeb and U Media.
Diversification Opportunities for Wistron NeWeb and U Media
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wistron and 6470 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wistron NeWeb Corp and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications 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 U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Wistron NeWeb i.e., Wistron NeWeb and U Media go up and down completely randomly.
Pair Corralation between Wistron NeWeb and U Media
Assuming the 90 days trading horizon Wistron NeWeb Corp is expected to generate 1.86 times more return on investment than U Media. However, Wistron NeWeb is 1.86 times more volatile than U Media Communications. It trades about 0.1 of its potential returns per unit of risk. U Media Communications is currently generating about -0.25 per unit of risk. If you would invest 13,500 in Wistron NeWeb Corp on October 29, 2024 and sell it today you would earn a total of 700.00 from holding Wistron NeWeb Corp or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wistron NeWeb Corp vs. U Media Communications
Performance |
| Timeline |
| Wistron NeWeb Corp |
| U Media Communications |
Wistron NeWeb and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wistron NeWeb and U Media
The main advantage of trading using opposite Wistron NeWeb and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron NeWeb position performs unexpectedly, U Media 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 U Media will offset losses from the drop in U Media's long position.| Wistron NeWeb vs. Unimicron Technology Corp | Wistron NeWeb vs. Kinsus Interconnect Technology | Wistron NeWeb vs. Novatek Microelectronics Corp | Wistron NeWeb vs. Delta Electronics |
| U Media vs. Sunspring Metal Corp | U Media vs. Chialin Precision Industrial | U Media vs. Mosa Industrial Corp | U Media vs. Song Ho Industrial |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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