Correlation Between U Tech and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both U Tech 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 U Tech and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Tech Media Corp and ABC Taiwan Electronics, you can compare the effects of market volatilities on U Tech 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 U Tech with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Tech and ABC Taiwan.
Diversification Opportunities for U Tech and ABC Taiwan
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3050 and ABC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding U Tech Media Corp 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 U Tech 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 U Tech Media Corp 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 U Tech i.e., U Tech and ABC Taiwan go up and down completely randomly.
Pair Corralation between U Tech and ABC Taiwan
Assuming the 90 days trading horizon U Tech Media Corp is expected to under-perform the ABC Taiwan. In addition to that, U Tech is 1.22 times more volatile than ABC Taiwan Electronics. It trades about -0.02 of its total potential returns per unit of risk. ABC Taiwan Electronics is currently generating about 0.0 per unit of volatility. If you would invest 2,180 in ABC Taiwan Electronics on September 13, 2024 and sell it today you would lose (10.00) from holding ABC Taiwan Electronics or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Tech Media Corp vs. ABC Taiwan Electronics
Performance |
| Timeline |
| U Tech Media |
| ABC Taiwan Electronics |
U Tech and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Tech and ABC Taiwan
The main advantage of trading using opposite U Tech and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Tech 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.| U Tech vs. AU Optronics | U Tech vs. Innolux Corp | U Tech vs. Ruentex Development Co | U Tech vs. WiseChip Semiconductor |
| ABC Taiwan vs. Ji Haw Industrial Co | ABC Taiwan vs. Softstar Entertainment | ABC Taiwan vs. Baotek Industrial Materials | ABC Taiwan vs. Gamania Digital Entertainment |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |