Correlation Between Ardentec and Taiwan Chinsan
Can any of the company-specific risk be diversified away by investing in both Ardentec and Taiwan Chinsan 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 Ardentec and Taiwan Chinsan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ardentec and Taiwan Chinsan Electronic, you can compare the effects of market volatilities on Ardentec and Taiwan Chinsan 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 Ardentec with a short position of Taiwan Chinsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardentec and Taiwan Chinsan.
Diversification Opportunities for Ardentec and Taiwan Chinsan
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ardentec and Taiwan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ardentec and Taiwan Chinsan Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Chinsan Electronic and Ardentec 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 Ardentec are associated (or correlated) with Taiwan Chinsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Chinsan Electronic has no effect on the direction of Ardentec i.e., Ardentec and Taiwan Chinsan go up and down completely randomly.
Pair Corralation between Ardentec and Taiwan Chinsan
Assuming the 90 days trading horizon Ardentec is expected to under-perform the Taiwan Chinsan. But the stock apears to be less risky and, when comparing its historical volatility, Ardentec is 3.96 times less risky than Taiwan Chinsan. The stock trades about -0.11 of its potential returns per unit of risk. The Taiwan Chinsan Electronic is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,485 in Taiwan Chinsan Electronic on September 12, 2024 and sell it today you would earn a total of 1,085 from holding Taiwan Chinsan Electronic or generate 31.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ardentec vs. Taiwan Chinsan Electronic
Performance |
| Timeline |
| Ardentec |
| Taiwan Chinsan Electronic |
Ardentec and Taiwan Chinsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ardentec and Taiwan Chinsan
The main advantage of trading using opposite Ardentec and Taiwan Chinsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardentec position performs unexpectedly, Taiwan Chinsan 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 Chinsan will offset losses from the drop in Taiwan Chinsan's long position.| Ardentec vs. Tang Eng Iron | Ardentec vs. Information Technology Total | Ardentec vs. Evergreen International Storage | Ardentec vs. AVer Information |
| Taiwan Chinsan vs. ANJI Technology Co | Taiwan Chinsan vs. Emerging Display Technologies | Taiwan Chinsan vs. U Tech Media Corp | Taiwan Chinsan vs. Ruentex Development Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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