Correlation Between GlobalWafers and EMemory Technology
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and EMemory 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 EMemory 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 eMemory Technology, you can compare the effects of market volatilities on GlobalWafers and EMemory 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 EMemory Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and EMemory Technology.
Diversification Opportunities for GlobalWafers and EMemory Technology
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GlobalWafers and EMemory is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and eMemory Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMemory 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 EMemory Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMemory Technology has no effect on the direction of GlobalWafers i.e., GlobalWafers and EMemory Technology go up and down completely randomly.
Pair Corralation between GlobalWafers and EMemory Technology
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the EMemory Technology. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.87 times less risky than EMemory Technology. The stock trades about 0.0 of its potential returns per unit of risk. The eMemory Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 145,550 in eMemory Technology on August 26, 2024 and sell it today you would earn a total of 154,450 from holding eMemory Technology or generate 106.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. eMemory Technology
Performance |
| Timeline |
| GlobalWafers |
| eMemory Technology |
GlobalWafers and EMemory Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and EMemory Technology
The main advantage of trading using opposite GlobalWafers and EMemory Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, EMemory 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 EMemory Technology will offset losses from the drop in EMemory Technology's long position.| GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Quanta Computer | GlobalWafers vs. United Microelectronics |
| EMemory Technology vs. Global Unichip Corp | EMemory Technology vs. Asmedia Technology | EMemory Technology vs. Unimicron Technology Corp | EMemory Technology vs. Novatek Microelectronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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