Correlation Between Nanya Technology and Walsin Technology

Can any of the company-specific risk be diversified away by investing in both Nanya Technology and Walsin 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 Nanya Technology and Walsin Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nanya Technology Corp and Walsin Technology Corp, you can compare the effects of market volatilities on Nanya Technology and Walsin 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 Nanya Technology with a short position of Walsin Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanya Technology and Walsin Technology.

Diversification Opportunities for Nanya Technology and Walsin Technology

0.81

Correlation Coefficient

Nanya Technology  Walsin Technology

Very poor diversification

The 3 months correlation between Nanya and Walsin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nanya Technology Corp and Walsin Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Technology Corp and Nanya Technology 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 Nanya Technology Corp are associated (or correlated) with Walsin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Technology Corp has no effect on the direction of Nanya Technology i.e., Nanya Technology and Walsin Technology go up and down completely randomly.

Pair Corralation between Nanya Technology and Walsin Technology

Assuming the 90 days trading horizon Nanya Technology Corp is expected to under-perform the Walsin Technology. But the stock apears to be less risky and, when comparing its historical volatility, Nanya Technology Corp is 1.09 times less risky than Walsin Technology. The stock trades about -0.04 of its potential returns per unit of risk. The Walsin Technology Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7,780  in Walsin Technology Corp on September 12, 2024 and sell it today you would earn a total of  1,920  from holding Walsin Technology Corp or generate 24.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Nanya Technology Corp  vs.  Walsin Technology Corp

Nanya Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanya Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Walsin Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walsin Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Walsin Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nanya Technology and Walsin Technology

The main advantage of trading using opposite Nanya Technology and Walsin Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanya Technology position performs unexpectedly, Walsin 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 Walsin Technology will offset losses from the drop in Walsin Technology's long position.

The idea behind Nanya Technology Corp and Walsin Technology Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.