Correlation Between New Asia and Tainet Communication
Can any of the company-specific risk be diversified away by investing in both New Asia and Tainet Communication 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 New Asia and Tainet Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Asia Construction and Tainet Communication System, you can compare the effects of market volatilities on New Asia and Tainet Communication 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 New Asia with a short position of Tainet Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Tainet Communication.
Diversification Opportunities for New Asia and Tainet Communication
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between New and Tainet is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction and Tainet Communication System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainet Communication and New Asia 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 New Asia Construction are associated (or correlated) with Tainet Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainet Communication has no effect on the direction of New Asia i.e., New Asia and Tainet Communication go up and down completely randomly.
Pair Corralation between New Asia and Tainet Communication
Assuming the 90 days trading horizon New Asia Construction is expected to generate 0.93 times more return on investment than Tainet Communication. However, New Asia Construction is 1.07 times less risky than Tainet Communication. It trades about 0.09 of its potential returns per unit of risk. Tainet Communication System is currently generating about 0.05 per unit of risk. If you would invest 499.00 in New Asia Construction on September 12, 2024 and sell it today you would earn a total of 806.00 from holding New Asia Construction or generate 161.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Asia Construction vs. Tainet Communication System
Performance |
| Timeline |
| New Asia Construction |
| Tainet Communication |
New Asia and Tainet Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Tainet Communication
The main advantage of trading using opposite New Asia and Tainet Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, Tainet Communication 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 Tainet Communication will offset losses from the drop in Tainet Communication's long position.| New Asia vs. Yang Ming Marine | New Asia vs. Wan Hai Lines | New Asia vs. U Ming Marine Transport | New Asia vs. Taiwan Navigation Co |
| Tainet Communication vs. Gemtek Technology Co | Tainet Communication vs. Ruentex Development Co | Tainet Communication vs. WiseChip Semiconductor | Tainet Communication vs. Novatek Microelectronics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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