Correlation Between Taiwan Mask and Kaimei Electronic
Can any of the company-specific risk be diversified away by investing in both Taiwan Mask and Kaimei Electronic 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 Kaimei Electronic 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 Kaimei Electronic Corp, you can compare the effects of market volatilities on Taiwan Mask and Kaimei Electronic 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 Kaimei Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Mask and Kaimei Electronic.
Diversification Opportunities for Taiwan Mask and Kaimei Electronic
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Kaimei is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Mask Corp and Kaimei Electronic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaimei Electronic Corp 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 Kaimei Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaimei Electronic Corp has no effect on the direction of Taiwan Mask i.e., Taiwan Mask and Kaimei Electronic go up and down completely randomly.
Pair Corralation between Taiwan Mask and Kaimei Electronic
Assuming the 90 days trading horizon Taiwan Mask is expected to generate 2.05 times less return on investment than Kaimei Electronic. But when comparing it to its historical volatility, Taiwan Mask Corp is 1.17 times less risky than Kaimei Electronic. It trades about 0.06 of its potential returns per unit of risk. Kaimei Electronic Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,570 in Kaimei Electronic Corp on November 28, 2024 and sell it today you would earn a total of 240.00 from holding Kaimei Electronic Corp or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Mask Corp vs. Kaimei Electronic Corp
Performance |
| Timeline |
| Taiwan Mask Corp |
| Kaimei Electronic Corp |
Taiwan Mask and Kaimei Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Mask and Kaimei Electronic
The main advantage of trading using opposite Taiwan Mask and Kaimei Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Mask position performs unexpectedly, Kaimei Electronic 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 Kaimei Electronic will offset losses from the drop in Kaimei Electronic's long position.| Taiwan Mask vs. Macronix International Co | Taiwan Mask vs. Mosel Vitelic | Taiwan Mask vs. Winbond Electronics Corp | Taiwan Mask vs. Silicon Integrated Systems |
| Kaimei Electronic vs. Yageo Corp | Kaimei Electronic vs. Taiwan Mask Corp | Kaimei Electronic vs. Macronix International Co | Kaimei Electronic vs. Gold Circuit 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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