Correlation Between GlobalWafers and LARGAN Precision
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and LARGAN Precision 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 GlobalWafers and LARGAN Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and LARGAN Precision Co, you can compare the effects of market volatilities on GlobalWafers and LARGAN Precision 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 GlobalWafers with a short position of LARGAN Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and LARGAN Precision.
Diversification Opportunities for GlobalWafers and LARGAN Precision
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlobalWafers and LARGAN is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and LARGAN Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LARGAN Precision and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with LARGAN Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LARGAN Precision has no effect on the direction of GlobalWafers i.e., GlobalWafers and LARGAN Precision go up and down completely randomly.
Pair Corralation between GlobalWafers and LARGAN Precision
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the LARGAN Precision. In addition to that, GlobalWafers is 1.07 times more volatile than LARGAN Precision Co. It trades about -0.16 of its total potential returns per unit of risk. LARGAN Precision Co is currently generating about 0.13 per unit of volatility. If you would invest 237,000 in LARGAN Precision Co on October 25, 2024 and sell it today you would earn a total of 38,000 from holding LARGAN Precision Co or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. LARGAN Precision Co
Performance |
| Timeline |
| GlobalWafers |
| LARGAN Precision |
GlobalWafers and LARGAN Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and LARGAN Precision
The main advantage of trading using opposite GlobalWafers and LARGAN Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, LARGAN Precision 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 LARGAN Precision will offset losses from the drop in LARGAN Precision's long position.| GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo Corp |
| LARGAN Precision vs. MediaTek | LARGAN Precision vs. Hon Hai Precision | LARGAN Precision vs. Delta Electronics | LARGAN Precision vs. Catcher Technology 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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