Correlation Between Acer E and Wistron Corp
Can any of the company-specific risk be diversified away by investing in both Acer E and Wistron Corp 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 Acer E and Wistron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acer E Enabling Service and Wistron Corp, you can compare the effects of market volatilities on Acer E and Wistron Corp 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 Acer E with a short position of Wistron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acer E and Wistron Corp.
Diversification Opportunities for Acer E and Wistron Corp
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Acer and Wistron is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Acer E Enabling Service and Wistron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Corp and Acer E 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 Acer E Enabling Service are associated (or correlated) with Wistron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Corp has no effect on the direction of Acer E i.e., Acer E and Wistron Corp go up and down completely randomly.
Pair Corralation between Acer E and Wistron Corp
Assuming the 90 days trading horizon Acer E is expected to generate 2.31 times less return on investment than Wistron Corp. In addition to that, Acer E is 1.04 times more volatile than Wistron Corp. It trades about 0.04 of its total potential returns per unit of risk. Wistron Corp is currently generating about 0.09 per unit of volatility. If you would invest 3,365 in Wistron Corp on December 2, 2024 and sell it today you would earn a total of 7,835 from holding Wistron Corp or generate 232.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Acer E Enabling Service vs. Wistron Corp
Performance |
| Timeline |
| Acer E Enabling |
| Wistron Corp |
Acer E and Wistron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acer E and Wistron Corp
The main advantage of trading using opposite Acer E and Wistron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acer E position performs unexpectedly, Wistron Corp 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 Wistron Corp will offset losses from the drop in Wistron Corp's long position.| Acer E vs. U Ming Marine Transport | ||
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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