Correlation Between Taichung Commercial and AVer Information

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Can any of the company-specific risk be diversified away by investing in both Taichung Commercial and AVer Information 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 Taichung Commercial and AVer Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taichung Commercial Bank and AVer Information, you can compare the effects of market volatilities on Taichung Commercial and AVer Information 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 Taichung Commercial with a short position of AVer Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taichung Commercial and AVer Information.

Diversification Opportunities for Taichung Commercial and AVer Information

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Taichung and AVer is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Taichung Commercial Bank and AVer Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVer Information and Taichung Commercial 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 Taichung Commercial Bank are associated (or correlated) with AVer Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVer Information has no effect on the direction of Taichung Commercial i.e., Taichung Commercial and AVer Information go up and down completely randomly.

Pair Corralation between Taichung Commercial and AVer Information

Assuming the 90 days trading horizon Taichung Commercial Bank is expected to generate 0.58 times more return on investment than AVer Information. However, Taichung Commercial Bank is 1.71 times less risky than AVer Information. It trades about 0.03 of its potential returns per unit of risk. AVer Information is currently generating about -0.03 per unit of risk. If you would invest  1,875  in Taichung Commercial Bank on October 30, 2024 and sell it today you would earn a total of  15.00  from holding Taichung Commercial Bank or generate 0.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Taichung Commercial Bank  vs.  AVer Information

 Performance 
       Timeline  
Taichung Commercial Bank 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Taichung Commercial Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Taichung Commercial may actually be approaching a critical reversion point that can send shares even higher in February 2025.
AVer Information 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AVer Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Taichung Commercial and AVer Information Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Taichung Commercial and AVer Information

The main advantage of trading using opposite Taichung Commercial and AVer Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taichung Commercial position performs unexpectedly, AVer Information 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 AVer Information will offset losses from the drop in AVer Information's long position.
The idea behind Taichung Commercial Bank and AVer Information pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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