Correlation Between Elite Semiconductor and Te Chang
Can any of the company-specific risk be diversified away by investing in both Elite Semiconductor and Te Chang 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 Elite Semiconductor and Te Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Semiconductor Memory and Te Chang Construction, you can compare the effects of market volatilities on Elite Semiconductor and Te Chang 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 Elite Semiconductor with a short position of Te Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Semiconductor and Te Chang.
Diversification Opportunities for Elite Semiconductor and Te Chang
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Elite and 5511 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Elite Semiconductor Memory and Te Chang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Te Chang Construction and Elite Semiconductor 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 Elite Semiconductor Memory are associated (or correlated) with Te Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Te Chang Construction has no effect on the direction of Elite Semiconductor i.e., Elite Semiconductor and Te Chang go up and down completely randomly.
Pair Corralation between Elite Semiconductor and Te Chang
Assuming the 90 days trading horizon Elite Semiconductor Memory is expected to under-perform the Te Chang. In addition to that, Elite Semiconductor is 2.04 times more volatile than Te Chang Construction. It trades about -0.15 of its total potential returns per unit of risk. Te Chang Construction is currently generating about 0.02 per unit of volatility. If you would invest 6,320 in Te Chang Construction on November 8, 2024 and sell it today you would earn a total of 20.00 from holding Te Chang Construction or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Elite Semiconductor Memory vs. Te Chang Construction
Performance |
| Timeline |
| Elite Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Te Chang Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Elite Semiconductor and Te Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Semiconductor and Te Chang
The main advantage of trading using opposite Elite Semiconductor and Te Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Semiconductor position performs unexpectedly, Te Chang 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 Te Chang will offset losses from the drop in Te Chang's long position.The idea behind Elite Semiconductor Memory and Te Chang Construction 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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