Correlation Between Sunny Friend and Walsin Lihwa
Can any of the company-specific risk be diversified away by investing in both Sunny Friend and Walsin Lihwa 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 Sunny Friend and Walsin Lihwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Friend Environmental and Walsin Lihwa Corp, you can compare the effects of market volatilities on Sunny Friend and Walsin Lihwa 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 Sunny Friend with a short position of Walsin Lihwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Walsin Lihwa.
Diversification Opportunities for Sunny Friend and Walsin Lihwa
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sunny and Walsin is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental and Walsin Lihwa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Lihwa Corp and Sunny Friend 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 Sunny Friend Environmental are associated (or correlated) with Walsin Lihwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Lihwa Corp has no effect on the direction of Sunny Friend i.e., Sunny Friend and Walsin Lihwa go up and down completely randomly.
Pair Corralation between Sunny Friend and Walsin Lihwa
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to generate 0.95 times more return on investment than Walsin Lihwa. However, Sunny Friend Environmental is 1.05 times less risky than Walsin Lihwa. It trades about -0.18 of its potential returns per unit of risk. Walsin Lihwa Corp is currently generating about -0.18 per unit of risk. If you would invest 9,750 in Sunny Friend Environmental on August 26, 2024 and sell it today you would lose (710.00) from holding Sunny Friend Environmental or give up 7.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Walsin Lihwa Corp
Performance |
| Timeline |
| Sunny Friend Environ |
| Walsin Lihwa Corp |
Sunny Friend and Walsin Lihwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Walsin Lihwa
The main advantage of trading using opposite Sunny Friend and Walsin Lihwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend position performs unexpectedly, Walsin Lihwa 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 Walsin Lihwa will offset losses from the drop in Walsin Lihwa's long position.| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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