Correlation Between GlobalWafers and Prosperity Dielectrics
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Prosperity Dielectrics 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 Prosperity Dielectrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Prosperity Dielectrics Co, you can compare the effects of market volatilities on GlobalWafers and Prosperity Dielectrics 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 Prosperity Dielectrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Prosperity Dielectrics.
Diversification Opportunities for GlobalWafers and Prosperity Dielectrics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GlobalWafers and Prosperity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Prosperity Dielectrics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosperity Dielectrics 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 Prosperity Dielectrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosperity Dielectrics has no effect on the direction of GlobalWafers i.e., GlobalWafers and Prosperity Dielectrics go up and down completely randomly.
Pair Corralation between GlobalWafers and Prosperity Dielectrics
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Prosperity Dielectrics. In addition to that, GlobalWafers is 1.01 times more volatile than Prosperity Dielectrics Co. It trades about -0.15 of its total potential returns per unit of risk. Prosperity Dielectrics Co is currently generating about -0.1 per unit of volatility. If you would invest 4,900 in Prosperity Dielectrics Co on September 2, 2024 and sell it today you would lose (505.00) from holding Prosperity Dielectrics Co or give up 10.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Prosperity Dielectrics Co
Performance |
| Timeline |
| GlobalWafers |
| Prosperity Dielectrics |
GlobalWafers and Prosperity Dielectrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Prosperity Dielectrics
The main advantage of trading using opposite GlobalWafers and Prosperity Dielectrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Prosperity Dielectrics 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 Prosperity Dielectrics will offset losses from the drop in Prosperity Dielectrics' long position.| GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |