Correlation Between Macroblock and Chipbond Technology
Can any of the company-specific risk be diversified away by investing in both Macroblock and Chipbond 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 Macroblock and Chipbond Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macroblock and Chipbond Technology, you can compare the effects of market volatilities on Macroblock and Chipbond 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 Macroblock with a short position of Chipbond Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macroblock and Chipbond Technology.
Diversification Opportunities for Macroblock and Chipbond Technology
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Macroblock and Chipbond is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Macroblock and Chipbond Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chipbond Technology and Macroblock 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 Macroblock are associated (or correlated) with Chipbond Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chipbond Technology has no effect on the direction of Macroblock i.e., Macroblock and Chipbond Technology go up and down completely randomly.
Pair Corralation between Macroblock and Chipbond Technology
Assuming the 90 days trading horizon Macroblock is expected to under-perform the Chipbond Technology. In addition to that, Macroblock is 1.1 times more volatile than Chipbond Technology. It trades about -0.11 of its total potential returns per unit of risk. Chipbond Technology is currently generating about -0.02 per unit of volatility. If you would invest 7,000 in Chipbond Technology on September 4, 2024 and sell it today you would lose (630.00) from holding Chipbond Technology or give up 9.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macroblock vs. Chipbond Technology
Performance |
| Timeline |
| Macroblock |
| Chipbond Technology |
Macroblock and Chipbond Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macroblock and Chipbond Technology
The main advantage of trading using opposite Macroblock and Chipbond Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macroblock position performs unexpectedly, Chipbond 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 Chipbond Technology will offset losses from the drop in Chipbond Technology's long position.| Macroblock vs. Newretail Co | Macroblock vs. Chunghwa Telecom Co | Macroblock vs. Tait Marketing Distribution | Macroblock vs. Tai Tung Communication |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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