Correlation Between ESUN Financial and Microtips Technology
Can any of the company-specific risk be diversified away by investing in both ESUN Financial and Microtips Technology 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 ESUN Financial and Microtips Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESUN Financial Holding and Microtips Technology, you can compare the effects of market volatilities on ESUN Financial and Microtips Technology 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 ESUN Financial with a short position of Microtips Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESUN Financial and Microtips Technology.
Diversification Opportunities for ESUN Financial and Microtips Technology
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ESUN and Microtips is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ESUN Financial Holding and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology and ESUN Financial 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 ESUN Financial Holding are associated (or correlated) with Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of ESUN Financial i.e., ESUN Financial and Microtips Technology go up and down completely randomly.
Pair Corralation between ESUN Financial and Microtips Technology
Assuming the 90 days trading horizon ESUN Financial Holding is expected to generate 0.37 times more return on investment than Microtips Technology. However, ESUN Financial Holding is 2.68 times less risky than Microtips Technology. It trades about -0.03 of its potential returns per unit of risk. Microtips Technology is currently generating about -0.01 per unit of risk. If you would invest 2,835 in ESUN Financial Holding on September 2, 2024 and sell it today you would lose (135.00) from holding ESUN Financial Holding or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ESUN Financial Holding vs. Microtips Technology
Performance |
| Timeline |
| ESUN Financial Holding |
| Microtips Technology |
ESUN Financial and Microtips Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESUN Financial and Microtips Technology
The main advantage of trading using opposite ESUN Financial and Microtips Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESUN Financial position performs unexpectedly, Microtips Technology 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 Microtips Technology will offset losses from the drop in Microtips Technology's long position.| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon Financial Holding |
| Microtips Technology vs. Taiwan Semiconductor Manufacturing | Microtips Technology vs. MediaTek | Microtips Technology vs. United Microelectronics | Microtips Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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