Correlation Between GlobalWafers and Visual Photonics

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

By analyzing existing cross correlation between GlobalWafers Co and Visual Photonics Epitaxy, you can compare the effects of market volatilities on GlobalWafers and Visual Photonics 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 Visual Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Visual Photonics.

Diversification Opportunities for GlobalWafers and Visual Photonics

-0.13

Correlation Coefficient

GlobalWafers  Visual Photonics

Good diversification

The 3 months correlation between GlobalWafers and Visual is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Visual Photonics Epitaxy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visual Photonics Epitaxy 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 Visual Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visual Photonics Epitaxy has no effect on the direction of GlobalWafers i.e., GlobalWafers and Visual Photonics go up and down completely randomly.

Pair Corralation between GlobalWafers and Visual Photonics

Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Visual Photonics. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 1.81 times less risky than Visual Photonics. The stock trades about 0.0 of its potential returns per unit of risk. The Visual Photonics Epitaxy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,820  in Visual Photonics Epitaxy on August 31, 2024 and sell it today you would earn a total of  6,430  from holding Visual Photonics Epitaxy or generate 65.48% 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.  Visual Photonics Epitaxy

GlobalWafers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalWafers Co 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 December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Visual Photonics Epitaxy

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Visual Photonics Epitaxy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Visual Photonics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with GlobalWafers and Visual Photonics

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

The idea behind GlobalWafers Co and Visual Photonics Epitaxy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.