Correlation Between Taiwan Mask and Gold Circuit
Can any of the company-specific risk be diversified away by investing in both Taiwan Mask and Gold Circuit 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 Mask and Gold Circuit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Mask Corp and Gold Circuit Electronics, you can compare the effects of market volatilities on Taiwan Mask and Gold Circuit 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 Mask with a short position of Gold Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Mask and Gold Circuit.
Diversification Opportunities for Taiwan Mask and Gold Circuit
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Gold is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Mask Corp and Gold Circuit Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Circuit Electronics and Taiwan Mask 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 Mask Corp are associated (or correlated) with Gold Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Circuit Electronics has no effect on the direction of Taiwan Mask i.e., Taiwan Mask and Gold Circuit go up and down completely randomly.
Pair Corralation between Taiwan Mask and Gold Circuit
Assuming the 90 days trading horizon Taiwan Mask Corp is expected to under-perform the Gold Circuit. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Mask Corp is 1.13 times less risky than Gold Circuit. The stock trades about -0.06 of its potential returns per unit of risk. The Gold Circuit Electronics is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 19,050 in Gold Circuit Electronics on September 3, 2024 and sell it today you would lose (500.00) from holding Gold Circuit Electronics or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Mask Corp vs. Gold Circuit Electronics
Performance |
| Timeline |
| Taiwan Mask Corp |
| Gold Circuit Electronics |
Taiwan Mask and Gold Circuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Mask and Gold Circuit
The main advantage of trading using opposite Taiwan Mask and Gold Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Mask position performs unexpectedly, Gold Circuit 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 Gold Circuit will offset losses from the drop in Gold Circuit's long position.| Taiwan Mask vs. Taiwan Semiconductor Manufacturing | Taiwan Mask vs. Yang Ming Marine | Taiwan Mask vs. ASE Industrial Holding | Taiwan Mask vs. AU Optronics |
| Gold Circuit vs. Compeq Manufacturing Co | Gold Circuit vs. Unitech Printed Circuit | Gold Circuit vs. Unimicron Technology Corp | Gold Circuit vs. WUS Printed Circuit |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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