Correlation Between GlobalWafers and Adata Technology
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Adata 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 GlobalWafers and Adata Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Adata Technology Co, you can compare the effects of market volatilities on GlobalWafers and Adata 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 GlobalWafers with a short position of Adata Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Adata Technology.
Diversification Opportunities for GlobalWafers and Adata Technology
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GlobalWafers and Adata is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Adata Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adata Technology 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 Adata Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adata Technology has no effect on the direction of GlobalWafers i.e., GlobalWafers and Adata Technology go up and down completely randomly.
Pair Corralation between GlobalWafers and Adata Technology
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Adata Technology. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.44 times less risky than Adata Technology. The stock trades about -0.25 of its potential returns per unit of risk. The Adata Technology Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 7,900 in Adata Technology Co on October 29, 2024 and sell it today you would lose (200.00) from holding Adata Technology Co or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Adata Technology Co
Performance |
| Timeline |
| GlobalWafers |
| Adata Technology |
GlobalWafers and Adata Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Adata Technology
The main advantage of trading using opposite GlobalWafers and Adata Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Adata 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 Adata Technology will offset losses from the drop in Adata Technology's long position.| GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo Corp |
| Adata Technology vs. WIN Semiconductors | Adata Technology vs. Visual Photonics Epitaxy | Adata Technology vs. GlobalWafers Co | Adata Technology vs. Unimicron Technology Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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