Correlation Between Tatung System and Wistron Information
Can any of the company-specific risk be diversified away by investing in both Tatung System and Wistron Information 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 Tatung System and Wistron Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tatung System Technologies and Wistron Information Technology, you can compare the effects of market volatilities on Tatung System and Wistron Information 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 Tatung System with a short position of Wistron Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tatung System and Wistron Information.
Diversification Opportunities for Tatung System and Wistron Information
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tatung and Wistron is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tatung System Technologies and Wistron Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron Information and Tatung System 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 Tatung System Technologies are associated (or correlated) with Wistron Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Information has no effect on the direction of Tatung System i.e., Tatung System and Wistron Information go up and down completely randomly.
Pair Corralation between Tatung System and Wistron Information
Assuming the 90 days trading horizon Tatung System Technologies is expected to generate 1.29 times more return on investment than Wistron Information. However, Tatung System is 1.29 times more volatile than Wistron Information Technology. It trades about 0.05 of its potential returns per unit of risk. Wistron Information Technology is currently generating about 0.01 per unit of risk. If you would invest 5,918 in Tatung System Technologies on August 27, 2024 and sell it today you would earn a total of 2,782 from holding Tatung System Technologies or generate 47.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tatung System Technologies vs. Wistron Information Technology
Performance |
| Timeline |
| Tatung System Techno |
| Wistron Information |
Tatung System and Wistron Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tatung System and Wistron Information
The main advantage of trading using opposite Tatung System and Wistron Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tatung System position performs unexpectedly, Wistron Information 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 Information will offset losses from the drop in Wistron Information's long position.| Tatung System vs. Alcor Micro | Tatung System vs. Singatron Enterprise Co | Tatung System vs. Wah Hong Industrial | Tatung System vs. CoAsia Microelectronics |
| Wistron Information vs. Acer E Enabling Service | Wistron Information vs. Sysage Technology Co | Wistron Information vs. Syscom Computer Engineering | Wistron Information vs. Jetwell Computer 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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