Correlation Between Sinbon Electronics and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both Sinbon Electronics and ABC Taiwan 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 Sinbon Electronics and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinbon Electronics Co and ABC Taiwan Electronics, you can compare the effects of market volatilities on Sinbon Electronics and ABC Taiwan 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 Sinbon Electronics with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinbon Electronics and ABC Taiwan.
Diversification Opportunities for Sinbon Electronics and ABC Taiwan
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sinbon and ABC is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sinbon Electronics Co and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics and Sinbon Electronics 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 Sinbon Electronics Co are associated (or correlated) with ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of Sinbon Electronics i.e., Sinbon Electronics and ABC Taiwan go up and down completely randomly.
Pair Corralation between Sinbon Electronics and ABC Taiwan
Assuming the 90 days trading horizon Sinbon Electronics Co is expected to under-perform the ABC Taiwan. In addition to that, Sinbon Electronics is 1.03 times more volatile than ABC Taiwan Electronics. It trades about -0.04 of its total potential returns per unit of risk. ABC Taiwan Electronics is currently generating about -0.03 per unit of volatility. If you would invest 2,830 in ABC Taiwan Electronics on August 31, 2024 and sell it today you would lose (565.00) from holding ABC Taiwan Electronics or give up 19.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sinbon Electronics Co vs. ABC Taiwan Electronics
Performance |
| Timeline |
| Sinbon Electronics |
| ABC Taiwan Electronics |
Sinbon Electronics and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinbon Electronics and ABC Taiwan
The main advantage of trading using opposite Sinbon Electronics and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinbon Electronics position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's long position.The idea behind Sinbon Electronics Co and ABC Taiwan Electronics 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.| ABC Taiwan vs. Nankang Rubber Tire | ABC Taiwan vs. An Shin Food Services | ABC Taiwan vs. Solar Applied Materials | ABC Taiwan vs. Tehmag Foods |
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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