Correlation Between Lien Chang and GeneFerm Biotechnology
Can any of the company-specific risk be diversified away by investing in both Lien Chang and GeneFerm Biotechnology 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 Lien Chang and GeneFerm Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lien Chang Electronic and GeneFerm Biotechnology Co, you can compare the effects of market volatilities on Lien Chang and GeneFerm Biotechnology 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 Lien Chang with a short position of GeneFerm Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lien Chang and GeneFerm Biotechnology.
Diversification Opportunities for Lien Chang and GeneFerm Biotechnology
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lien and GeneFerm is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lien Chang Electronic and GeneFerm Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneFerm Biotechnology and Lien Chang 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 Lien Chang Electronic are associated (or correlated) with GeneFerm Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneFerm Biotechnology has no effect on the direction of Lien Chang i.e., Lien Chang and GeneFerm Biotechnology go up and down completely randomly.
Pair Corralation between Lien Chang and GeneFerm Biotechnology
Assuming the 90 days trading horizon Lien Chang Electronic is expected to generate 0.91 times more return on investment than GeneFerm Biotechnology. However, Lien Chang Electronic is 1.1 times less risky than GeneFerm Biotechnology. It trades about 0.04 of its potential returns per unit of risk. GeneFerm Biotechnology Co is currently generating about -0.02 per unit of risk. If you would invest 1,011 in Lien Chang Electronic on September 14, 2024 and sell it today you would earn a total of 444.00 from holding Lien Chang Electronic or generate 43.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lien Chang Electronic vs. GeneFerm Biotechnology Co
Performance |
| Timeline |
| Lien Chang Electronic |
| GeneFerm Biotechnology |
Lien Chang and GeneFerm Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lien Chang and GeneFerm Biotechnology
The main advantage of trading using opposite Lien Chang and GeneFerm Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lien Chang position performs unexpectedly, GeneFerm Biotechnology 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 GeneFerm Biotechnology will offset losses from the drop in GeneFerm Biotechnology's long position.| Lien Chang vs. AU Optronics | Lien Chang vs. Innolux Corp | Lien Chang vs. Ruentex Development Co | Lien Chang vs. WiseChip Semiconductor |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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