Correlation Between New Advanced and Taiwan Paiho
Can any of the company-specific risk be diversified away by investing in both New Advanced and Taiwan Paiho 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 New Advanced and Taiwan Paiho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Advanced Electronics and Taiwan Paiho, you can compare the effects of market volatilities on New Advanced and Taiwan Paiho 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 New Advanced with a short position of Taiwan Paiho. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Advanced and Taiwan Paiho.
Diversification Opportunities for New Advanced and Taiwan Paiho
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between New and Taiwan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding New Advanced Electronics and Taiwan Paiho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Paiho and New Advanced 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 New Advanced Electronics are associated (or correlated) with Taiwan Paiho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Paiho has no effect on the direction of New Advanced i.e., New Advanced and Taiwan Paiho go up and down completely randomly.
Pair Corralation between New Advanced and Taiwan Paiho
Assuming the 90 days trading horizon New Advanced Electronics is expected to under-perform the Taiwan Paiho. In addition to that, New Advanced is 1.74 times more volatile than Taiwan Paiho. It trades about -0.22 of its total potential returns per unit of risk. Taiwan Paiho is currently generating about -0.08 per unit of volatility. If you would invest 8,140 in Taiwan Paiho on August 29, 2024 and sell it today you would lose (190.00) from holding Taiwan Paiho or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Advanced Electronics vs. Taiwan Paiho
Performance |
| Timeline |
| New Advanced Electronics |
| Taiwan Paiho |
New Advanced and Taiwan Paiho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Advanced and Taiwan Paiho
The main advantage of trading using opposite New Advanced and Taiwan Paiho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Advanced position performs unexpectedly, Taiwan Paiho 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 Paiho will offset losses from the drop in Taiwan Paiho's long position.| New Advanced vs. Advantech Co | New Advanced vs. IEI Integration Corp | New Advanced vs. Flytech Technology Co | New Advanced vs. ADLINK Technology |
| Taiwan Paiho vs. Taiwan Semiconductor Manufacturing | Taiwan Paiho vs. Hon Hai Precision | Taiwan Paiho vs. MediaTek | Taiwan Paiho vs. Chunghwa Telecom 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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