Correlation Between Lien Chang and CoAsia Microelectronics
Can any of the company-specific risk be diversified away by investing in both Lien Chang and CoAsia Microelectronics 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 CoAsia Microelectronics 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 CoAsia Microelectronics, you can compare the effects of market volatilities on Lien Chang and CoAsia Microelectronics 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 CoAsia Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lien Chang and CoAsia Microelectronics.
Diversification Opportunities for Lien Chang and CoAsia Microelectronics
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lien and CoAsia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lien Chang Electronic and CoAsia Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoAsia Microelectronics 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 CoAsia Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoAsia Microelectronics has no effect on the direction of Lien Chang i.e., Lien Chang and CoAsia Microelectronics go up and down completely randomly.
Pair Corralation between Lien Chang and CoAsia Microelectronics
Assuming the 90 days trading horizon Lien Chang Electronic is expected to generate 1.09 times more return on investment than CoAsia Microelectronics. However, Lien Chang is 1.09 times more volatile than CoAsia Microelectronics. It trades about 0.09 of its potential returns per unit of risk. CoAsia Microelectronics is currently generating about -0.1 per unit of risk. If you would invest 1,365 in Lien Chang Electronic on October 23, 2024 and sell it today you would earn a total of 60.00 from holding Lien Chang Electronic or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lien Chang Electronic vs. CoAsia Microelectronics
Performance |
| Timeline |
| Lien Chang Electronic |
| CoAsia Microelectronics |
Lien Chang and CoAsia Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lien Chang and CoAsia Microelectronics
The main advantage of trading using opposite Lien Chang and CoAsia Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lien Chang position performs unexpectedly, CoAsia Microelectronics 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 CoAsia Microelectronics will offset losses from the drop in CoAsia Microelectronics' long position.| Lien Chang vs. Hitron Technologies | Lien Chang vs. Universal Microelectronics Co | Lien Chang vs. Pan International Industrial Corp | Lien Chang vs. Sunonwealth Electric Machine |
| CoAsia Microelectronics vs. Energenesis Biomedical Co | CoAsia Microelectronics vs. Prime Oil Chemical | CoAsia Microelectronics vs. Jia Jie Biomedical | CoAsia Microelectronics vs. Hsinli Chemical Industrial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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