Correlation Between ABC Taiwan and ANJI Technology
Can any of the company-specific risk be diversified away by investing in both ABC Taiwan and ANJI Technology 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 ANJI Technology 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 ANJI Technology Co, you can compare the effects of market volatilities on ABC Taiwan and ANJI Technology 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 ANJI Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABC Taiwan and ANJI Technology.
Diversification Opportunities for ABC Taiwan and ANJI Technology
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ABC and ANJI is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding ABC Taiwan Electronics and ANJI Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANJI Technology 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 ANJI Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANJI Technology has no effect on the direction of ABC Taiwan i.e., ABC Taiwan and ANJI Technology go up and down completely randomly.
Pair Corralation between ABC Taiwan and ANJI Technology
Assuming the 90 days trading horizon ABC Taiwan Electronics is expected to generate 0.85 times more return on investment than ANJI Technology. However, ABC Taiwan Electronics is 1.18 times less risky than ANJI Technology. It trades about -0.03 of its potential returns per unit of risk. ANJI Technology Co is currently generating about -0.04 per unit of risk. If you would invest 2,700 in ABC Taiwan Electronics on September 12, 2024 and sell it today you would lose (530.00) from holding ABC Taiwan Electronics or give up 19.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABC Taiwan Electronics vs. ANJI Technology Co
Performance |
| Timeline |
| ABC Taiwan Electronics |
| ANJI Technology |
ABC Taiwan and ANJI Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABC Taiwan and ANJI Technology
The main advantage of trading using opposite ABC Taiwan and ANJI Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABC Taiwan position performs unexpectedly, ANJI Technology 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 ANJI Technology will offset losses from the drop in ANJI Technology'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 |
| ANJI Technology vs. AU Optronics | ANJI Technology vs. Innolux Corp | ANJI Technology vs. Ruentex Development Co | ANJI Technology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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