Correlation Between Innolux Corp and Scientech Corp
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Scientech Corp 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 Scientech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Scientech Corp, you can compare the effects of market volatilities on Innolux Corp and Scientech Corp 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 Scientech Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Scientech Corp.
Diversification Opportunities for Innolux Corp and Scientech Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innolux and Scientech is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Scientech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientech Corp 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 Scientech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientech Corp has no effect on the direction of Innolux Corp i.e., Innolux Corp and Scientech Corp go up and down completely randomly.
Pair Corralation between Innolux Corp and Scientech Corp
Assuming the 90 days trading horizon Innolux Corp is expected to generate 7.21 times less return on investment than Scientech Corp. But when comparing it to its historical volatility, Innolux Corp is 1.5 times less risky than Scientech Corp. It trades about 0.01 of its potential returns per unit of risk. Scientech Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 24,000 in Scientech Corp on September 12, 2024 and sell it today you would earn a total of 19,700 from holding Scientech Corp or generate 82.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Scientech Corp
Performance |
| Timeline |
| Innolux Corp |
| Scientech Corp |
Innolux Corp and Scientech Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Scientech Corp
The main advantage of trading using opposite Innolux Corp and Scientech Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Scientech Corp 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 Scientech Corp will offset losses from the drop in Scientech Corp'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 |
| Scientech Corp vs. Foxsemicon Integrated Technology | Scientech Corp vs. Phoenix Silicon International | Scientech Corp vs. FocalTech Systems Co | Scientech Corp vs. Formosa Sumco Technology |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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