Correlation Between Elitegroup Computer and Biostar Microtech
Can any of the company-specific risk be diversified away by investing in both Elitegroup Computer and Biostar Microtech 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 Elitegroup Computer and Biostar Microtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elitegroup Computer Systems and Biostar Microtech International, you can compare the effects of market volatilities on Elitegroup Computer and Biostar Microtech 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 Elitegroup Computer with a short position of Biostar Microtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elitegroup Computer and Biostar Microtech.
Diversification Opportunities for Elitegroup Computer and Biostar Microtech
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elitegroup and Biostar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Elitegroup Computer Systems and Biostar Microtech Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biostar Microtech and Elitegroup Computer 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 Elitegroup Computer Systems are associated (or correlated) with Biostar Microtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biostar Microtech has no effect on the direction of Elitegroup Computer i.e., Elitegroup Computer and Biostar Microtech go up and down completely randomly.
Pair Corralation between Elitegroup Computer and Biostar Microtech
Assuming the 90 days trading horizon Elitegroup Computer is expected to generate 10.04 times less return on investment than Biostar Microtech. But when comparing it to its historical volatility, Elitegroup Computer Systems is 1.17 times less risky than Biostar Microtech. It trades about 0.02 of its potential returns per unit of risk. Biostar Microtech International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,505 in Biostar Microtech International on November 28, 2024 and sell it today you would earn a total of 85.00 from holding Biostar Microtech International or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elitegroup Computer Systems vs. Biostar Microtech Internationa
Performance |
| Timeline |
| Elitegroup Computer |
| Biostar Microtech |
Elitegroup Computer and Biostar Microtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elitegroup Computer and Biostar Microtech
The main advantage of trading using opposite Elitegroup Computer and Biostar Microtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elitegroup Computer position performs unexpectedly, Biostar Microtech 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 Biostar Microtech will offset losses from the drop in Biostar Microtech's long position.| Elitegroup Computer vs. Micro Star International Co | Elitegroup Computer vs. Gigabyte Technology Co | Elitegroup Computer vs. Compal Electronics | Elitegroup Computer vs. VIA Technologies |
| Biostar Microtech vs. Elitegroup Computer Systems | Biostar Microtech vs. Gigabyte Technology Co | Biostar Microtech vs. Micro Star International Co | Biostar Microtech vs. Shuttle |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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