Correlation Between Yageo Corp and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Yageo Corp and Lien Chang 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 Yageo Corp and Lien Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yageo Corp and Lien Chang Electronic, you can compare the effects of market volatilities on Yageo Corp and Lien Chang 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 Yageo Corp with a short position of Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yageo Corp and Lien Chang.
Diversification Opportunities for Yageo Corp and Lien Chang
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yageo and Lien is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yageo Corp and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic and Yageo Corp 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 Yageo Corp are associated (or correlated) with Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Yageo Corp i.e., Yageo Corp and Lien Chang go up and down completely randomly.
Pair Corralation between Yageo Corp and Lien Chang
Assuming the 90 days trading horizon Yageo Corp is expected to generate 1.96 times less return on investment than Lien Chang. But when comparing it to its historical volatility, Yageo Corp is 1.52 times less risky than Lien Chang. It trades about 0.05 of its potential returns per unit of risk. Lien Chang Electronic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,380 in Lien Chang Electronic on October 25, 2024 and sell it today you would earn a total of 40.00 from holding Lien Chang Electronic or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yageo Corp vs. Lien Chang Electronic
Performance |
| Timeline |
| Yageo Corp |
| Lien Chang Electronic |
Yageo Corp and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yageo Corp and Lien Chang
The main advantage of trading using opposite Yageo Corp and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yageo Corp position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang's long position.| Yageo Corp vs. Elite Semiconductor Memory | Yageo Corp vs. Sunny Friend Environmental | Yageo Corp vs. Century Iron And | Yageo Corp vs. Chia Yi Steel |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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