Correlation Between Wistron NeWeb and Genesis Technology

Can any of the company-specific risk be diversified away by investing in both Wistron NeWeb 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 NeWeb 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 NeWeb Corp and Genesis Technology, you can compare the effects of market volatilities on Wistron NeWeb 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 NeWeb with a short position of Genesis Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wistron NeWeb and Genesis Technology.

Diversification Opportunities for Wistron NeWeb and Genesis Technology

0.82

Correlation Coefficient

Wistron NeWeb  Genesis Technology

Very poor diversification

The 3 months correlation between Wistron and Genesis is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wistron NeWeb Corp and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology and Wistron NeWeb 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 NeWeb Corp 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 NeWeb i.e., Wistron NeWeb and Genesis Technology go up and down completely randomly.

Pair Corralation between Wistron NeWeb and Genesis Technology

Assuming the 90 days trading horizon Wistron NeWeb is expected to generate 2.23 times less return on investment than Genesis Technology. In addition to that, Wistron NeWeb is 1.32 times more volatile than Genesis Technology. It trades about 0.09 of its total potential returns per unit of risk. Genesis Technology is currently generating about 0.26 per unit of volatility. If you would invest  7,790  in Genesis Technology on July 13, 2024 and sell it today you would earn a total of  510.00  from holding Genesis Technology or generate 6.55% return on investment over 90 days.

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

Wistron NeWeb Corp  vs.  Genesis Technology

Wistron NeWeb Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 fairly stable basic indicators, Genesis 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 Wistron NeWeb and Genesis Technology

The main advantage of trading using opposite Wistron NeWeb and Genesis Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wistron NeWeb 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 NeWeb Corp 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.