Correlation Between Innolux Corp and Amazing Microelectronic
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Amazing Microelectronic 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 Amazing Microelectronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Amazing Microelectronic, you can compare the effects of market volatilities on Innolux Corp and Amazing Microelectronic 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 Amazing Microelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Amazing Microelectronic.
Diversification Opportunities for Innolux Corp and Amazing Microelectronic
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innolux and Amazing is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Amazing Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazing Microelectronic 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 Amazing Microelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazing Microelectronic has no effect on the direction of Innolux Corp i.e., Innolux Corp and Amazing Microelectronic go up and down completely randomly.
Pair Corralation between Innolux Corp and Amazing Microelectronic
Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.31 times more return on investment than Amazing Microelectronic. However, Innolux Corp is 1.31 times more volatile than Amazing Microelectronic. It trades about 0.05 of its potential returns per unit of risk. Amazing Microelectronic is currently generating about -0.01 per unit of risk. If you would invest 1,365 in Innolux Corp on September 5, 2024 and sell it today you would earn a total of 180.00 from holding Innolux Corp or generate 13.19% 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. Amazing Microelectronic
Performance |
| Timeline |
| Innolux Corp |
| Amazing Microelectronic |
Innolux Corp and Amazing Microelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Amazing Microelectronic
The main advantage of trading using opposite Innolux Corp and Amazing Microelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Amazing Microelectronic 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 Amazing Microelectronic will offset losses from the drop in Amazing Microelectronic's long position.| Innolux Corp vs. Taiwan Semiconductor Manufacturing | Innolux Corp vs. Yang Ming Marine | Innolux Corp vs. AU Optronics | Innolux Corp vs. Nan Ya Plastics |
| Amazing Microelectronic vs. Taiwan Semiconductor Manufacturing | Amazing Microelectronic vs. Yang Ming Marine | Amazing Microelectronic vs. AU Optronics | Amazing Microelectronic vs. Nan Ya Plastics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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