Correlation Between Wah Hong and Egis Technology
Can any of the company-specific risk be diversified away by investing in both Wah Hong and Egis 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 Wah Hong and Egis Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wah Hong Industrial and Egis Technology, you can compare the effects of market volatilities on Wah Hong and Egis 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 Wah Hong with a short position of Egis Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wah Hong and Egis Technology.
Diversification Opportunities for Wah Hong and Egis Technology
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wah and Egis is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wah Hong Industrial and Egis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egis Technology and Wah Hong 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 Wah Hong Industrial are associated (or correlated) with Egis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egis Technology has no effect on the direction of Wah Hong i.e., Wah Hong and Egis Technology go up and down completely randomly.
Pair Corralation between Wah Hong and Egis Technology
Assuming the 90 days trading horizon Wah Hong Industrial is expected to generate 0.56 times more return on investment than Egis Technology. However, Wah Hong Industrial is 1.8 times less risky than Egis Technology. It trades about 0.43 of its potential returns per unit of risk. Egis Technology is currently generating about -0.01 per unit of risk. If you would invest 4,025 in Wah Hong Industrial on November 28, 2024 and sell it today you would earn a total of 505.00 from holding Wah Hong Industrial or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Wah Hong Industrial vs. Egis Technology
Performance |
| Timeline |
| Wah Hong Industrial |
| Egis Technology |
Wah Hong and Egis Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wah Hong and Egis Technology
The main advantage of trading using opposite Wah Hong and Egis Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wah Hong position performs unexpectedly, Egis 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 Egis Technology will offset losses from the drop in Egis Technology's long position.| Wah Hong vs. Tatung System Technologies | Wah Hong vs. Taiwan Chinsan Electronic | Wah Hong vs. Alcor Micro | Wah Hong vs. AVY Precision Technology |
| Egis Technology vs. WIN Semiconductors | Egis Technology vs. Aspeed Technology | Egis Technology vs. LARGAN Precision Co | Egis Technology vs. Novatek Microelectronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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