Correlation Between Innolux Corp and Tai Tung
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Tai Tung 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 Tai Tung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Tai Tung Communication, you can compare the effects of market volatilities on Innolux Corp and Tai Tung 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 Tai Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Tai Tung.
Diversification Opportunities for Innolux Corp and Tai Tung
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Innolux and Tai is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Tai Tung Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tai Tung Communication 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 Tai Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tai Tung Communication has no effect on the direction of Innolux Corp i.e., Innolux Corp and Tai Tung go up and down completely randomly.
Pair Corralation between Innolux Corp and Tai Tung
Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.1 times less return on investment than Tai Tung. But when comparing it to its historical volatility, Innolux Corp is 1.25 times less risky than Tai Tung. It trades about 0.04 of its potential returns per unit of risk. Tai Tung Communication is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,345 in Tai Tung Communication on September 13, 2024 and sell it today you would earn a total of 195.00 from holding Tai Tung Communication or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Tai Tung Communication
Performance |
| Timeline |
| Innolux Corp |
| Tai Tung Communication |
Innolux Corp and Tai Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Tai Tung
The main advantage of trading using opposite Innolux Corp and Tai Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Tai Tung 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 Tai Tung will offset losses from the drop in Tai Tung'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 |
| Tai Tung vs. AU Optronics | Tai Tung vs. Innolux Corp | Tai Tung vs. Ruentex Development Co | Tai Tung 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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