Correlation Between LARGAN Precision and Taiwan Allied
Can any of the company-specific risk be diversified away by investing in both LARGAN Precision and Taiwan Allied 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 LARGAN Precision and Taiwan Allied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LARGAN Precision Co and Taiwan Allied Container, you can compare the effects of market volatilities on LARGAN Precision and Taiwan Allied 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 LARGAN Precision with a short position of Taiwan Allied. Check out your portfolio center. Please also check ongoing floating volatility patterns of LARGAN Precision and Taiwan Allied.
Diversification Opportunities for LARGAN Precision and Taiwan Allied
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LARGAN and Taiwan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and Taiwan Allied Container in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Allied Container and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with Taiwan Allied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Allied Container has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and Taiwan Allied go up and down completely randomly.
Pair Corralation between LARGAN Precision and Taiwan Allied
Assuming the 90 days trading horizon LARGAN Precision Co is expected to generate 1.34 times more return on investment than Taiwan Allied. However, LARGAN Precision is 1.34 times more volatile than Taiwan Allied Container. It trades about 0.3 of its potential returns per unit of risk. Taiwan Allied Container is currently generating about -0.03 per unit of risk. If you would invest 244,000 in LARGAN Precision Co on October 9, 2024 and sell it today you would earn a total of 24,000 from holding LARGAN Precision Co or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LARGAN Precision Co vs. Taiwan Allied Container
Performance |
| Timeline |
| LARGAN Precision |
| Taiwan Allied Container |
LARGAN Precision and Taiwan Allied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LARGAN Precision and Taiwan Allied
The main advantage of trading using opposite LARGAN Precision and Taiwan Allied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LARGAN Precision position performs unexpectedly, Taiwan Allied 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 Taiwan Allied will offset losses from the drop in Taiwan Allied's long position.| LARGAN Precision vs. MediaTek | LARGAN Precision vs. Hon Hai Precision | LARGAN Precision vs. Delta Electronics | LARGAN Precision vs. Catcher Technology Co |
| Taiwan Allied vs. Sports Gear Co | Taiwan Allied vs. Formosa Chemicals Fibre | Taiwan Allied vs. Taiwan Semiconductor Co | Taiwan Allied vs. Orient Semiconductor Electronics |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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