Correlation Between ABC Taiwan and Ji Haw
Can any of the company-specific risk be diversified away by investing in both ABC Taiwan and Ji Haw 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 ABC Taiwan and Ji Haw into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABC Taiwan Electronics and Ji Haw Industrial Co, you can compare the effects of market volatilities on ABC Taiwan and Ji Haw 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 ABC Taiwan with a short position of Ji Haw. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC Taiwan and Ji Haw.
Diversification Opportunities for ABC Taiwan and Ji Haw
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABC and 3011 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ABC Taiwan Electronics and Ji Haw Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ji Haw Industrial and ABC Taiwan 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 ABC Taiwan Electronics are associated (or correlated) with Ji Haw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ji Haw Industrial has no effect on the direction of ABC Taiwan i.e., ABC Taiwan and Ji Haw go up and down completely randomly.
Pair Corralation between ABC Taiwan and Ji Haw
Assuming the 90 days trading horizon ABC Taiwan Electronics is expected to under-perform the Ji Haw. In addition to that, ABC Taiwan is 1.21 times more volatile than Ji Haw Industrial Co. It trades about -0.05 of its total potential returns per unit of risk. Ji Haw Industrial Co is currently generating about 0.09 per unit of volatility. If you would invest 2,525 in Ji Haw Industrial Co on September 13, 2024 and sell it today you would earn a total of 75.00 from holding Ji Haw Industrial Co or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABC Taiwan Electronics vs. Ji Haw Industrial Co
Performance |
| Timeline |
| ABC Taiwan Electronics |
| Ji Haw Industrial |
ABC Taiwan and Ji Haw Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABC Taiwan and Ji Haw
The main advantage of trading using opposite ABC Taiwan and Ji Haw positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABC Taiwan position performs unexpectedly, Ji Haw 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 Ji Haw will offset losses from the drop in Ji Haw's long position.| ABC Taiwan vs. ANJI Technology Co | ABC Taiwan vs. Emerging Display Technologies | ABC Taiwan vs. U Tech Media Corp | ABC Taiwan vs. Ruentex Development Co |
| Ji Haw vs. AU Optronics | Ji Haw vs. Innolux Corp | Ji Haw vs. Ruentex Development Co | Ji Haw vs. WiseChip Semiconductor |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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