Correlation Between Western Digital and Top GloveBhd

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

By analyzing existing cross correlation between Western Digital and Top Glove, you can compare the effects of market volatilities on Western Digital and Top GloveBhd 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 Western Digital with a short position of Top GloveBhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Top GloveBhd.

Diversification Opportunities for Western Digital and Top GloveBhd

-0.12

Correlation Coefficient

Western Digital  Top GloveBhd

Good diversification

The 3 months correlation between Western and Top is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Top Glove in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top GloveBhd and Western Digital 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 Western Digital are associated (or correlated) with Top GloveBhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top GloveBhd has no effect on the direction of Western Digital i.e., Western Digital and Top GloveBhd go up and down completely randomly.

Pair Corralation between Western Digital and Top GloveBhd

Considering the 90-day investment horizon Western Digital is expected to generate 0.66 times more return on investment than Top GloveBhd. However, Western Digital is 1.52 times less risky than Top GloveBhd. It trades about 0.46 of its potential returns per unit of risk. Top Glove is currently generating about 0.02 per unit of risk. If you would invest  4,422  in Western Digital on May 7, 2025 and sell it today you would earn a total of  3,307  from holding Western Digital or generate 74.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Western Digital  vs.  Top Glove

Western Digital

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Western Digital are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Western Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Top GloveBhd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Top Glove are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Top GloveBhd is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Western Digital and Top GloveBhd

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

The idea behind Western Digital and Top Glove 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.