Correlation Between Taiwan Semiconductor and Walsin Lihwa
Can any of the company-specific risk be diversified away by investing in both Taiwan Semiconductor and Walsin Lihwa 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 Taiwan Semiconductor and Walsin Lihwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Semiconductor Manufacturing and Walsin Lihwa Corp, you can compare the effects of market volatilities on Taiwan Semiconductor and Walsin Lihwa 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 Taiwan Semiconductor with a short position of Walsin Lihwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Semiconductor and Walsin Lihwa.
Diversification Opportunities for Taiwan Semiconductor and Walsin Lihwa
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and Walsin is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and Walsin Lihwa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walsin Lihwa Corp and Taiwan Semiconductor 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 Taiwan Semiconductor Manufacturing are associated (or correlated) with Walsin Lihwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walsin Lihwa Corp has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and Walsin Lihwa go up and down completely randomly.
Pair Corralation between Taiwan Semiconductor and Walsin Lihwa
Assuming the 90 days trading horizon Taiwan Semiconductor Manufacturing is expected to generate 0.9 times more return on investment than Walsin Lihwa. However, Taiwan Semiconductor Manufacturing is 1.11 times less risky than Walsin Lihwa. It trades about 0.09 of its potential returns per unit of risk. Walsin Lihwa Corp is currently generating about -0.18 per unit of risk. If you would invest 104,598 in Taiwan Semiconductor Manufacturing on October 26, 2024 and sell it today you would earn a total of 8,902 from holding Taiwan Semiconductor Manufacturing or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Semiconductor Manufactu vs. Walsin Lihwa Corp
Performance |
| Timeline |
| Taiwan Semiconductor |
| Walsin Lihwa Corp |
Taiwan Semiconductor and Walsin Lihwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Semiconductor and Walsin Lihwa
The main advantage of trading using opposite Taiwan Semiconductor and Walsin Lihwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Semiconductor position performs unexpectedly, Walsin Lihwa 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 Walsin Lihwa will offset losses from the drop in Walsin Lihwa's long position.| Taiwan Semiconductor vs. United Microelectronics | Taiwan Semiconductor vs. Hon Hai Precision | Taiwan Semiconductor vs. MediaTek | Taiwan Semiconductor vs. Taiwan Semiconductor Manufacturing |
| Walsin Lihwa vs. TECO Electric Machinery | Walsin Lihwa vs. Far Eastern New | Walsin Lihwa vs. Nan Ya Plastics | Walsin Lihwa vs. Winbond Electronics Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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