Correlation Between Innolux Corp and Information Technology
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Information Technology 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 Information Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Information Technology Total, you can compare the effects of market volatilities on Innolux Corp and Information Technology 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 Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Information Technology.
Diversification Opportunities for Innolux Corp and Information Technology
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Innolux and Information is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology 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 Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Innolux Corp i.e., Innolux Corp and Information Technology go up and down completely randomly.
Pair Corralation between Innolux Corp and Information Technology
Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.33 times less return on investment than Information Technology. But when comparing it to its historical volatility, Innolux Corp is 1.41 times less risky than Information Technology. It trades about 0.11 of its potential returns per unit of risk. Information Technology Total is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,490 in Information Technology Total on September 15, 2024 and sell it today you would earn a total of 195.00 from holding Information Technology Total or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Information Technology Total
Performance |
| Timeline |
| Innolux Corp |
| Information Technology |
Innolux Corp and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Information Technology
The main advantage of trading using opposite Innolux Corp and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Information Technology 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 Information Technology will offset losses from the drop in Information Technology'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 |
| Information Technology vs. Wistron Information Technology | Information Technology vs. Syscom Computer Engineering | Information Technology vs. Tatung System Technologies |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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