Correlation Between Innolux Corp and TPK Holding
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and TPK Holding 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 TPK Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and TPK Holding Co, you can compare the effects of market volatilities on Innolux Corp and TPK Holding 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 TPK Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and TPK Holding.
Diversification Opportunities for Innolux Corp and TPK Holding
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innolux and TPK is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and TPK Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPK Holding 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 TPK Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPK Holding has no effect on the direction of Innolux Corp i.e., Innolux Corp and TPK Holding go up and down completely randomly.
Pair Corralation between Innolux Corp and TPK Holding
Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.03 times more return on investment than TPK Holding. However, Innolux Corp is 1.03 times more volatile than TPK Holding Co. It trades about -0.07 of its potential returns per unit of risk. TPK Holding Co is currently generating about -0.14 per unit of risk. If you would invest 1,435 in Innolux Corp on October 29, 2024 and sell it today you would lose (30.00) from holding Innolux Corp or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. TPK Holding Co
Performance |
| Timeline |
| Innolux Corp |
| TPK Holding |
Innolux Corp and TPK Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and TPK Holding
The main advantage of trading using opposite Innolux Corp and TPK Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, TPK Holding 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 TPK Holding will offset losses from the drop in TPK Holding's long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. China Steel Corp | Innolux Corp vs. Hon Hai Precision | Innolux Corp vs. Delta Electronics |
| TPK Holding vs. Catcher Technology Co | TPK Holding vs. Innolux Corp | TPK Holding vs. LARGAN Precision Co | TPK Holding vs. Pegatron 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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