Correlation Between Innolux Corp and Creative Sensor
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Creative Sensor 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 Creative Sensor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Creative Sensor, you can compare the effects of market volatilities on Innolux Corp and Creative Sensor 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 Creative Sensor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Creative Sensor.
Diversification Opportunities for Innolux Corp and Creative Sensor
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innolux and Creative is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Creative Sensor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Sensor 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 Creative Sensor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Sensor has no effect on the direction of Innolux Corp i.e., Innolux Corp and Creative Sensor go up and down completely randomly.
Pair Corralation between Innolux Corp and Creative Sensor
Assuming the 90 days trading horizon Innolux Corp is expected to generate 2.67 times less return on investment than Creative Sensor. But when comparing it to its historical volatility, Innolux Corp is 1.25 times less risky than Creative Sensor. It trades about 0.04 of its potential returns per unit of risk. Creative Sensor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Creative Sensor on September 14, 2024 and sell it today you would earn a total of 2,350 from holding Creative Sensor or generate 81.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Creative Sensor
Performance |
| Timeline |
| Innolux Corp |
| Creative Sensor |
Innolux Corp and Creative Sensor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Creative Sensor
The main advantage of trading using opposite Innolux Corp and Creative Sensor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Creative Sensor 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 Creative Sensor will offset losses from the drop in Creative Sensor'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 |
| Creative Sensor vs. AU Optronics | Creative Sensor vs. Innolux Corp | Creative Sensor vs. Ruentex Development Co | Creative Sensor 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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