Correlation Between Microelectronics and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Microelectronics and CHINA DEVELOPMENT 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 Microelectronics and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microelectronics Technology and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Microelectronics and CHINA DEVELOPMENT 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 Microelectronics with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and CHINA DEVELOPMENT.
Diversification Opportunities for Microelectronics and CHINA DEVELOPMENT
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microelectronics and CHINA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Microelectronics 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 Microelectronics Technology are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Microelectronics i.e., Microelectronics and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Microelectronics and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Microelectronics Technology is expected to under-perform the CHINA DEVELOPMENT. In addition to that, Microelectronics is 23.23 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about -0.07 of its total potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.41 per unit of volatility. If you would invest 784.00 in CHINA DEVELOPMENT FINANCIAL on October 25, 2024 and sell it today you would earn a total of 10.00 from holding CHINA DEVELOPMENT FINANCIAL or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microelectronics Technology vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Microelectronics Tec |
| CHINA DEVELOPMENT |
Microelectronics and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microelectronics and CHINA DEVELOPMENT
The main advantage of trading using opposite Microelectronics and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microelectronics position performs unexpectedly, CHINA DEVELOPMENT 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 CHINA DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.| Microelectronics vs. Unimicron Technology Corp | Microelectronics vs. Kinsus Interconnect Technology | Microelectronics vs. Novatek Microelectronics Corp | Microelectronics vs. Delta Electronics |
| CHINA DEVELOPMENT vs. Eastern Media International | CHINA DEVELOPMENT vs. GameSparcs Co | CHINA DEVELOPMENT vs. Formosa International Hotels | CHINA DEVELOPMENT vs. Hotel Holiday Garden |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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