Correlation Between Advanced Analog and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Advanced Analog and Lien Chang 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 Advanced Analog and Lien Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Analog Technology and Lien Chang Electronic, you can compare the effects of market volatilities on Advanced Analog and Lien Chang 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 Advanced Analog with a short position of Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Analog and Lien Chang.
Diversification Opportunities for Advanced Analog and Lien Chang
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Lien is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Analog Technology and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic and Advanced Analog 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 Advanced Analog Technology are associated (or correlated) with Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Advanced Analog i.e., Advanced Analog and Lien Chang go up and down completely randomly.
Pair Corralation between Advanced Analog and Lien Chang
Assuming the 90 days trading horizon Advanced Analog Technology is expected to under-perform the Lien Chang. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Analog Technology is 1.91 times less risky than Lien Chang. The stock trades about -0.41 of its potential returns per unit of risk. The Lien Chang Electronic is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,495 in Lien Chang Electronic on October 9, 2024 and sell it today you would lose (30.00) from holding Lien Chang Electronic or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Analog Technology vs. Lien Chang Electronic
Performance |
| Timeline |
| Advanced Analog Tech |
| Lien Chang Electronic |
Advanced Analog and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Analog and Lien Chang
The main advantage of trading using opposite Advanced Analog and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Analog position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang's long position.| Advanced Analog vs. Taiwan Semiconductor Manufacturing | Advanced Analog vs. MediaTek | Advanced Analog vs. United Microelectronics | Advanced Analog vs. Novatek Microelectronics Corp |
| Lien Chang vs. Holy Stone Enterprise | Lien Chang vs. Walsin Technology Corp | Lien Chang vs. Yageo Corp | Lien Chang vs. HannStar Board Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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