Correlation Between Elite Material and Powertech Technology
Can any of the company-specific risk be diversified away by investing in both Elite Material and Powertech Technology 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 Elite Material and Powertech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Material Co and Powertech Technology, you can compare the effects of market volatilities on Elite Material and Powertech Technology 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 Elite Material with a short position of Powertech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Material and Powertech Technology.
Diversification Opportunities for Elite Material and Powertech Technology
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elite and Powertech is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Elite Material Co and Powertech Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powertech Technology and Elite Material 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 Elite Material Co are associated (or correlated) with Powertech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powertech Technology has no effect on the direction of Elite Material i.e., Elite Material and Powertech Technology go up and down completely randomly.
Pair Corralation between Elite Material and Powertech Technology
Assuming the 90 days trading horizon Elite Material Co is expected to generate 1.66 times more return on investment than Powertech Technology. However, Elite Material is 1.66 times more volatile than Powertech Technology. It trades about 0.13 of its potential returns per unit of risk. Powertech Technology is currently generating about -0.17 per unit of risk. If you would invest 47,950 in Elite Material Co on September 12, 2024 and sell it today you would earn a total of 9,250 from holding Elite Material Co or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Material Co vs. Powertech Technology
Performance |
| Timeline |
| Elite Material |
| Powertech Technology |
Elite Material and Powertech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Material and Powertech Technology
The main advantage of trading using opposite Elite Material and Powertech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Material position performs unexpectedly, Powertech Technology 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 Powertech Technology will offset losses from the drop in Powertech Technology's long position.| Elite Material vs. AU Optronics | Elite Material vs. Innolux Corp | Elite Material vs. Ruentex Development Co | Elite Material vs. WiseChip Semiconductor |
| Powertech Technology vs. Novatek Microelectronics Corp | Powertech Technology vs. King Yuan Electronics | Powertech Technology vs. Realtek Semiconductor Corp | Powertech Technology vs. Nanya Technology Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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