Correlation Between GlobalWafers and Vate Technology
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Vate 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 Vate 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 Vate Technology Co, you can compare the effects of market volatilities on GlobalWafers and Vate 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 Vate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Vate Technology.
Diversification Opportunities for GlobalWafers and Vate Technology
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GlobalWafers and Vate is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Vate Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vate 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 Vate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vate Technology has no effect on the direction of GlobalWafers i.e., GlobalWafers and Vate Technology go up and down completely randomly.
Pair Corralation between GlobalWafers and Vate Technology
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Vate Technology. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.32 times less risky than Vate Technology. The stock trades about -0.16 of its potential returns per unit of risk. The Vate Technology Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,855 in Vate Technology Co on September 12, 2024 and sell it today you would earn a total of 50.00 from holding Vate Technology Co or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Vate Technology Co
Performance |
| Timeline |
| GlobalWafers |
| Vate Technology |
GlobalWafers and Vate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Vate Technology
The main advantage of trading using opposite GlobalWafers and Vate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Vate 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 Vate Technology will offset losses from the drop in Vate Technology's long position.| GlobalWafers vs. AU Optronics | GlobalWafers vs. Innolux Corp | GlobalWafers vs. Ruentex Development Co | GlobalWafers vs. WiseChip Semiconductor |
| Vate Technology vs. WIN Semiconductors | Vate Technology vs. GlobalWafers Co | Vate Technology vs. Novatek Microelectronics Corp | Vate Technology vs. Ruentex Development 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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