Correlation Between Innolux Corp and Cheng Mei
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Cheng Mei 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 Cheng Mei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Cheng Mei Materials, you can compare the effects of market volatilities on Innolux Corp and Cheng Mei 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 Cheng Mei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Cheng Mei.
Diversification Opportunities for Innolux Corp and Cheng Mei
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Innolux and Cheng is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Cheng Mei Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Mei Materials 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 Cheng Mei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Mei Materials has no effect on the direction of Innolux Corp i.e., Innolux Corp and Cheng Mei go up and down completely randomly.
Pair Corralation between Innolux Corp and Cheng Mei
Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.0 times more return on investment than Cheng Mei. However, Innolux Corp is 1.0 times more volatile than Cheng Mei Materials. It trades about 0.05 of its potential returns per unit of risk. Cheng Mei Materials is currently generating about 0.04 per unit of risk. If you would invest 1,071 in Innolux Corp on September 12, 2024 and sell it today you would earn a total of 479.00 from holding Innolux Corp or generate 44.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Innolux Corp vs. Cheng Mei Materials
Performance |
| Timeline |
| Innolux Corp |
| Cheng Mei Materials |
Innolux Corp and Cheng Mei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Cheng Mei
The main advantage of trading using opposite Innolux Corp and Cheng Mei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Cheng Mei 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 Cheng Mei will offset losses from the drop in Cheng Mei'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 |
| Cheng Mei vs. AU Optronics | Cheng Mei vs. Innolux Corp | Cheng Mei vs. Ruentex Development Co | Cheng Mei vs. WiseChip Semiconductor |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |