Correlation Between Microtips Technology and ESUN Financial
Can any of the company-specific risk be diversified away by investing in both Microtips Technology and ESUN Financial 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 Microtips Technology and ESUN Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microtips Technology and ESUN Financial Holding, you can compare the effects of market volatilities on Microtips Technology and ESUN Financial 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 Microtips Technology with a short position of ESUN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microtips Technology and ESUN Financial.
Diversification Opportunities for Microtips Technology and ESUN Financial
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microtips and ESUN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Microtips Technology and ESUN Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESUN Financial Holding and Microtips Technology 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 Microtips Technology are associated (or correlated) with ESUN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESUN Financial Holding has no effect on the direction of Microtips Technology i.e., Microtips Technology and ESUN Financial go up and down completely randomly.
Pair Corralation between Microtips Technology and ESUN Financial
Assuming the 90 days trading horizon Microtips Technology is expected to under-perform the ESUN Financial. In addition to that, Microtips Technology is 2.68 times more volatile than ESUN Financial Holding. It trades about -0.01 of its total potential returns per unit of risk. ESUN Financial Holding is currently generating about -0.03 per unit of volatility. If you would invest 2,835 in ESUN Financial Holding on September 2, 2024 and sell it today you would lose (135.00) from holding ESUN Financial Holding or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microtips Technology vs. ESUN Financial Holding
Performance |
| Timeline |
| Microtips Technology |
| ESUN Financial Holding |
Microtips Technology and ESUN Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microtips Technology and ESUN Financial
The main advantage of trading using opposite Microtips Technology and ESUN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microtips Technology position performs unexpectedly, ESUN Financial 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 ESUN Financial will offset losses from the drop in ESUN Financial's long position.| Microtips Technology vs. Taiwan Semiconductor Manufacturing | Microtips Technology vs. MediaTek | Microtips Technology vs. United Microelectronics | Microtips Technology vs. Novatek Microelectronics Corp |
| ESUN Financial vs. Mega Financial Holding | ESUN Financial vs. CTBC Financial Holding | ESUN Financial vs. First Financial Holding | ESUN Financial vs. Fubon Financial Holding |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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