Correlation Between Taiwan Semiconductor and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Taiwan Semiconductor and Ligitek Electronics 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 Ligitek Electronics 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 Ligitek Electronics Co, you can compare the effects of market volatilities on Taiwan Semiconductor and Ligitek Electronics 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 Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Semiconductor and Ligitek Electronics.
Diversification Opportunities for Taiwan Semiconductor and Ligitek Electronics
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Taiwan and Ligitek is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics 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 Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Taiwan Semiconductor and Ligitek Electronics
Assuming the 90 days trading horizon Taiwan Semiconductor Manufacturing is expected to under-perform the Ligitek Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Semiconductor Manufacturing is 2.19 times less risky than Ligitek Electronics. The stock trades about -0.12 of its potential returns per unit of risk. The Ligitek Electronics Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,030 in Ligitek Electronics Co on August 30, 2024 and sell it today you would lose (130.00) from holding Ligitek Electronics Co or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Semiconductor Manufactu vs. Ligitek Electronics Co
Performance |
| Timeline |
| Taiwan Semiconductor |
| Ligitek Electronics |
Taiwan Semiconductor and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Semiconductor and Ligitek Electronics
The main advantage of trading using opposite Taiwan Semiconductor and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Semiconductor position performs unexpectedly, Ligitek Electronics 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.| Taiwan Semiconductor vs. United Microelectronics | Taiwan Semiconductor vs. Hon Hai Precision | Taiwan Semiconductor vs. MediaTek | Taiwan Semiconductor vs. Taiwan Semiconductor Manufacturing |
| Ligitek Electronics vs. Hon Hai Precision | Ligitek Electronics vs. Delta Electronics | Ligitek Electronics vs. LARGAN Precision Co | Ligitek Electronics vs. E Ink Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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