Correlation Between Microelectronics and Chinese Gamer
Can any of the company-specific risk be diversified away by investing in both Microelectronics and Chinese Gamer 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 Chinese Gamer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microelectronics Technology and Chinese Gamer International, you can compare the effects of market volatilities on Microelectronics and Chinese Gamer 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 Chinese Gamer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and Chinese Gamer.
Diversification Opportunities for Microelectronics and Chinese Gamer
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microelectronics and Chinese is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology and Chinese Gamer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Gamer Intern 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 Chinese Gamer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Gamer Intern has no effect on the direction of Microelectronics i.e., Microelectronics and Chinese Gamer go up and down completely randomly.
Pair Corralation between Microelectronics and Chinese Gamer
Assuming the 90 days trading horizon Microelectronics Technology is expected to generate 3.22 times more return on investment than Chinese Gamer. However, Microelectronics is 3.22 times more volatile than Chinese Gamer International. It trades about 0.12 of its potential returns per unit of risk. Chinese Gamer International is currently generating about -0.12 per unit of risk. If you would invest 2,895 in Microelectronics Technology on August 30, 2024 and sell it today you would earn a total of 250.00 from holding Microelectronics Technology or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microelectronics Technology vs. Chinese Gamer International
Performance |
| Timeline |
| Microelectronics Tec |
| Chinese Gamer Intern |
Microelectronics and Chinese Gamer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microelectronics and Chinese Gamer
The main advantage of trading using opposite Microelectronics and Chinese Gamer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microelectronics position performs unexpectedly, Chinese Gamer 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 Chinese Gamer will offset losses from the drop in Chinese Gamer's long position.The idea behind Microelectronics Technology and Chinese Gamer International 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.| Chinese Gamer vs. YuantaP shares Taiwan Top | Chinese Gamer vs. YuantaP shares Taiwan Mid Cap | Chinese Gamer vs. YuantaP shares Taiwan Electronics | Chinese Gamer vs. Fubon MSCI Taiwan |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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