Correlation Between GlobalWafers and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Delta Electronics 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 GlobalWafers and Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Delta Electronics, you can compare the effects of market volatilities on GlobalWafers and Delta Electronics 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 GlobalWafers with a short position of Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Delta Electronics.
Diversification Opportunities for GlobalWafers and Delta Electronics
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GlobalWafers and Delta is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Delta Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics has no effect on the direction of GlobalWafers i.e., GlobalWafers and Delta Electronics go up and down completely randomly.
Pair Corralation between GlobalWafers and Delta Electronics
Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Delta Electronics. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.24 times less risky than Delta Electronics. The stock trades about -0.07 of its potential returns per unit of risk. The Delta Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 37,550 in Delta Electronics on September 6, 2024 and sell it today you would earn a total of 1,950 from holding Delta Electronics or generate 5.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GlobalWafers Co vs. Delta Electronics
Performance |
Timeline |
GlobalWafers |
Delta Electronics |
GlobalWafers and Delta Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GlobalWafers and Delta Electronics
The main advantage of trading using opposite GlobalWafers and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Delta Electronics 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 Delta Electronics will offset losses from the drop in Delta Electronics' long position.GlobalWafers vs. WIN Semiconductors | GlobalWafers vs. Sino American Silicon Products | GlobalWafers vs. Novatek Microelectronics Corp | GlobalWafers vs. Yageo Corp |
Delta Electronics vs. Quanta Computer | Delta Electronics vs. Hon Hai Precision | Delta Electronics vs. United Microelectronics | Delta Electronics vs. LARGAN Precision Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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