Correlation Between Wistron Information and Genesis Technology

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

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

Diversification Opportunities for Wistron Information and Genesis Technology

-0.27

Correlation Coefficient

Wistron Information  Genesis Technology

Very good diversification

The 3 months correlation between Wistron and Genesis is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Wistron Information Technology and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Wistron Information 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 Wistron Information Technology are associated (or correlated) with Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of Wistron Information i.e., Wistron Information and Genesis Technology go up and down completely randomly.

Pair Corralation between Wistron Information and Genesis Technology

Assuming the 90 days trading horizon Wistron Information Technology is expected to generate 0.72 times more return on investment than Genesis Technology. However, Wistron Information Technology is 1.39 times less risky than Genesis Technology. It trades about 0.15 of its potential returns per unit of risk. Genesis Technology is currently generating about -0.09 per unit of risk. If you would invest  11,400  in Wistron Information Technology on September 13, 2024 and sell it today you would earn a total of  2,500  from holding Wistron Information Technology or generate 21.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wistron Information Technology  vs.  Genesis Technology

Wistron Information

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wistron Information Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wistron Information showed solid returns over the last few months and may actually be approaching a breakup point.

Genesis Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Technology 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.

Pair Trading with Wistron Information and Genesis Technology

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

The idea behind Wistron Information Technology and Genesis Technology 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.