Correlation Between GlobalWafers and EGalaxeMPIA Technology
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and EGalaxeMPIA 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 EGalaxeMPIA 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 eGalaxeMPIA Technology, you can compare the effects of market volatilities on GlobalWafers and EGalaxeMPIA 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 EGalaxeMPIA Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and EGalaxeMPIA Technology.
Diversification Opportunities for GlobalWafers and EGalaxeMPIA Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlobalWafers and EGalaxeMPIA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and eGalaxeMPIA Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGalaxeMPIA 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 EGalaxeMPIA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGalaxeMPIA Technology has no effect on the direction of GlobalWafers i.e., GlobalWafers and EGalaxeMPIA Technology go up and down completely randomly.
Pair Corralation between GlobalWafers and EGalaxeMPIA Technology
Assuming the 90 days trading horizon GlobalWafers Co is expected to generate 2.25 times more return on investment than EGalaxeMPIA Technology. However, GlobalWafers is 2.25 times more volatile than eGalaxeMPIA Technology. It trades about 0.3 of its potential returns per unit of risk. eGalaxeMPIA Technology is currently generating about 0.42 per unit of risk. If you would invest 32,500 in GlobalWafers Co on December 4, 2024 and sell it today you would earn a total of 4,200 from holding GlobalWafers Co or generate 12.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. eGalaxeMPIA Technology
Performance |
| Timeline |
| GlobalWafers |
| eGalaxeMPIA Technology |
GlobalWafers and EGalaxeMPIA Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and EGalaxeMPIA Technology
The main advantage of trading using opposite GlobalWafers and EGalaxeMPIA Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, EGalaxeMPIA 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 EGalaxeMPIA Technology will offset losses from the drop in EGalaxeMPIA Technology's long position.| GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo Corp |
| EGalaxeMPIA Technology vs. Chipbond Technology | EGalaxeMPIA Technology vs. Vanguard International Semiconductor | EGalaxeMPIA Technology vs. Macroblock | EGalaxeMPIA Technology vs. Holtek Semiconductor |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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