Correlation Between Innolux Corp and Higher Way
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Higher Way 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 Innolux Corp and Higher Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Higher Way Electronic, you can compare the effects of market volatilities on Innolux Corp and Higher Way 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 Innolux Corp with a short position of Higher Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Higher Way.
Diversification Opportunities for Innolux Corp and Higher Way
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innolux and Higher is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Higher Way Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Higher Way Electronic and Innolux Corp 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 Innolux Corp are associated (or correlated) with Higher Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Higher Way Electronic has no effect on the direction of Innolux Corp i.e., Innolux Corp and Higher Way go up and down completely randomly.
Pair Corralation between Innolux Corp and Higher Way
Assuming the 90 days trading horizon Innolux Corp is expected to generate 0.86 times more return on investment than Higher Way. However, Innolux Corp is 1.16 times less risky than Higher Way. It trades about 0.05 of its potential returns per unit of risk. Higher Way Electronic is currently generating about 0.02 per unit of risk. If you would invest 1,071 in Innolux Corp on September 13, 2024 and sell it today you would earn a total of 504.00 from holding Innolux Corp or generate 47.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Innolux Corp vs. Higher Way Electronic
Performance |
| Timeline |
| Innolux Corp |
| Higher Way Electronic |
Innolux Corp and Higher Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Higher Way
The main advantage of trading using opposite Innolux Corp and Higher Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Higher Way 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 Higher Way will offset losses from the drop in Higher Way's long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. Ruentex Development Co | Innolux Corp vs. WiseChip Semiconductor | Innolux Corp vs. Novatek Microelectronics Corp |
| Higher Way vs. WIN Semiconductors | Higher Way vs. GlobalWafers Co | Higher Way vs. Novatek Microelectronics Corp | Higher Way 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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