Correlation Between Transcend Information and Phison Electronics
Can any of the company-specific risk be diversified away by investing in both Transcend Information and Phison Electronics 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 Transcend Information and Phison Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcend Information and Phison Electronics, you can compare the effects of market volatilities on Transcend Information and Phison Electronics 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 Transcend Information with a short position of Phison Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcend Information and Phison Electronics.
Diversification Opportunities for Transcend Information and Phison Electronics
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transcend and Phison is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Transcend Information and Phison Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phison Electronics and Transcend Information 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 Transcend Information are associated (or correlated) with Phison Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phison Electronics has no effect on the direction of Transcend Information i.e., Transcend Information and Phison Electronics go up and down completely randomly.
Pair Corralation between Transcend Information and Phison Electronics
Assuming the 90 days trading horizon Transcend Information is expected to generate 0.69 times more return on investment than Phison Electronics. However, Transcend Information is 1.45 times less risky than Phison Electronics. It trades about 0.04 of its potential returns per unit of risk. Phison Electronics is currently generating about 0.02 per unit of risk. If you would invest 7,900 in Transcend Information on December 3, 2024 and sell it today you would earn a total of 1,040 from holding Transcend Information or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcend Information vs. Phison Electronics
Performance |
| Timeline |
| Transcend Information |
| Phison Electronics |
Transcend Information and Phison Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcend Information and Phison Electronics
The main advantage of trading using opposite Transcend Information and Phison Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcend Information position performs unexpectedly, Phison Electronics 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 Phison Electronics will offset losses from the drop in Phison Electronics' long position.| Transcend Information vs. Nanya Technology Corp | ||
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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 CEOs Directory module to screen CEOs from public companies around the world.
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