Correlation Between D Link and Innolux Corp
Can any of the company-specific risk be diversified away by investing in both D Link and Innolux Corp 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 D Link and Innolux Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between D Link Corp and Innolux Corp, you can compare the effects of market volatilities on D Link and Innolux Corp 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 D Link with a short position of Innolux Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of D Link and Innolux Corp.
Diversification Opportunities for D Link and Innolux Corp
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 2332 and Innolux is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding D Link Corp and Innolux Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innolux Corp and D Link 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 D Link Corp are associated (or correlated) with Innolux Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innolux Corp has no effect on the direction of D Link i.e., D Link and Innolux Corp go up and down completely randomly.
Pair Corralation between D Link and Innolux Corp
Assuming the 90 days trading horizon D Link Corp is expected to generate 1.59 times more return on investment than Innolux Corp. However, D Link is 1.59 times more volatile than Innolux Corp. It trades about 0.14 of its potential returns per unit of risk. Innolux Corp is currently generating about -0.13 per unit of risk. If you would invest 1,935 in D Link Corp on August 30, 2024 and sell it today you would earn a total of 200.00 from holding D Link Corp or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
D Link Corp vs. Innolux Corp
Performance |
| Timeline |
| D Link Corp |
| Innolux Corp |
D Link and Innolux Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with D Link and Innolux Corp
The main advantage of trading using opposite D Link and Innolux Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if D Link position performs unexpectedly, Innolux Corp 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 Innolux Corp will offset losses from the drop in Innolux Corp's long position.| D Link vs. Accton Technology Corp | D Link vs. Compal Electronics | D Link vs. Qisda Corp | D Link vs. Macronix International Co |
| Innolux Corp vs. AU Optronics | Innolux Corp vs. China Steel Corp | Innolux Corp vs. Hon Hai Precision | Innolux Corp vs. Delta Electronics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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