Correlation Between Taichung Commercial and AVer Information
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Taichung Commercial Bank vs. AVer Information
Performance |
Timeline |
Taichung Commercial Bank |
AVer Information |
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.Taichung Commercial vs. Taiwan Business Bank | Taichung Commercial vs. Taishin Financial Holding | Taichung Commercial vs. Hua Nan Financial | Taichung Commercial vs. ESUN Financial Holding |
AVer Information vs. Evergreen Steel Corp | AVer Information vs. Wei Chih Steel | AVer Information vs. Sheng Yu Steel | AVer Information vs. Tung Ho Steel |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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