Correlation Between WM Technology and ChipMOS Technologies

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

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

Diversification Opportunities for WM Technology and ChipMOS Technologies

-0.37

Correlation Coefficient

WM Technology  ChipMOS Technologies

Very good diversification

The 3 months correlation between MAPSW and ChipMOS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding WM Technology and ChipMOS Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipMOS Technologies and WM 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 WM Technology are associated (or correlated) with ChipMOS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipMOS Technologies has no effect on the direction of WM Technology i.e., WM Technology and ChipMOS Technologies go up and down completely randomly.

Pair Corralation between WM Technology and ChipMOS Technologies

Assuming the 90 days horizon WM Technology is expected to generate 9.47 times more return on investment than ChipMOS Technologies. However, WM Technology is 9.47 times more volatile than ChipMOS Technologies. It trades about 0.13 of its potential returns per unit of risk. ChipMOS Technologies is currently generating about 0.12 per unit of risk. If you would invest  1.87  in WM Technology on April 23, 2025 and sell it today you would earn a total of  0.90  from holding WM Technology or generate 48.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

WM Technology  vs.  ChipMOS Technologies

WM Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WM Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, WM Technology showed solid returns over the last few months and may actually be approaching a breakup point.

ChipMOS Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChipMOS Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ChipMOS Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WM Technology and ChipMOS Technologies

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

The idea behind WM Technology and ChipMOS Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.