Correlation Between Advantech and Chialin Precision
Can any of the company-specific risk be diversified away by investing in both Advantech and Chialin Precision 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 Advantech and Chialin Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantech Co and Chialin Precision Industrial, you can compare the effects of market volatilities on Advantech and Chialin Precision 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 Advantech with a short position of Chialin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantech and Chialin Precision.
Diversification Opportunities for Advantech and Chialin Precision
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Advantech and Chialin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Advantech Co and Chialin Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chialin Precision and Advantech 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 Advantech Co are associated (or correlated) with Chialin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chialin Precision has no effect on the direction of Advantech i.e., Advantech and Chialin Precision go up and down completely randomly.
Pair Corralation between Advantech and Chialin Precision
Assuming the 90 days trading horizon Advantech Co is expected to generate 1.25 times more return on investment than Chialin Precision. However, Advantech is 1.25 times more volatile than Chialin Precision Industrial. It trades about 0.14 of its potential returns per unit of risk. Chialin Precision Industrial is currently generating about 0.02 per unit of risk. If you would invest 32,150 in Advantech Co on August 30, 2024 and sell it today you would earn a total of 2,500 from holding Advantech Co or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advantech Co vs. Chialin Precision Industrial
Performance |
| Timeline |
| Advantech |
| Chialin Precision |
Advantech and Chialin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advantech and Chialin Precision
The main advantage of trading using opposite Advantech and Chialin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantech position performs unexpectedly, Chialin Precision 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 Chialin Precision will offset losses from the drop in Chialin Precision's long position.| Advantech vs. Delta Electronics | Advantech vs. Quanta Computer | Advantech vs. Realtek Semiconductor Corp | Advantech vs. President Chain Store |
| Chialin Precision vs. Hon Hai Precision | Chialin Precision vs. Delta Electronics | Chialin Precision vs. LARGAN Precision Co | Chialin Precision vs. E Ink Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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