Correlation Between Aspeed Technology and Wah Hong

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

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

Diversification Opportunities for Aspeed Technology and Wah Hong

-0.49

Correlation Coefficient

Aspeed Technology  Wah Hong

Very good diversification

The 3 months correlation between Aspeed and Wah is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aspeed Technology and Wah Hong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wah Hong Industrial and Aspeed 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 Aspeed Technology are associated (or correlated) with Wah Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wah Hong Industrial has no effect on the direction of Aspeed Technology i.e., Aspeed Technology and Wah Hong go up and down completely randomly.

Pair Corralation between Aspeed Technology and Wah Hong

Assuming the 90 days trading horizon Aspeed Technology is expected to generate 1.38 times more return on investment than Wah Hong. However, Aspeed Technology is 1.38 times more volatile than Wah Hong Industrial. It trades about 0.05 of its potential returns per unit of risk. Wah Hong Industrial is currently generating about 0.05 per unit of risk. If you would invest  252,437  in Aspeed Technology on September 12, 2024 and sell it today you would earn a total of  140,063  from holding Aspeed Technology or generate 55.48% return on investment over 90 days.

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

Aspeed Technology  vs.  Wah Hong Industrial

Aspeed Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspeed 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.

Wah Hong Industrial

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Aspeed Technology and Wah Hong

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

The idea behind Aspeed Technology and Wah Hong Industrial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.