Correlation Between Jia Jie and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both Jia Jie and ABC Taiwan 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 Jia Jie and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jia Jie Biomedical and ABC Taiwan Electronics, you can compare the effects of market volatilities on Jia Jie and ABC Taiwan 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 Jia Jie with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jia Jie and ABC Taiwan.
Diversification Opportunities for Jia Jie and ABC Taiwan
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Jia and ABC is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Jia Jie Biomedical and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics and Jia Jie 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 Jia Jie Biomedical are associated (or correlated) with ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of Jia Jie i.e., Jia Jie and ABC Taiwan go up and down completely randomly.
Pair Corralation between Jia Jie and ABC Taiwan
Assuming the 90 days trading horizon Jia Jie Biomedical is expected to generate 1.61 times more return on investment than ABC Taiwan. However, Jia Jie is 1.61 times more volatile than ABC Taiwan Electronics. It trades about 0.06 of its potential returns per unit of risk. ABC Taiwan Electronics is currently generating about -0.03 per unit of risk. If you would invest 1,481 in Jia Jie Biomedical on August 31, 2024 and sell it today you would earn a total of 919.00 from holding Jia Jie Biomedical or generate 62.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Jia Jie Biomedical vs. ABC Taiwan Electronics
Performance |
| Timeline |
| Jia Jie Biomedical |
| ABC Taiwan Electronics |
Jia Jie and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jia Jie and ABC Taiwan
The main advantage of trading using opposite Jia Jie and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jia Jie position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's long position.| Jia Jie vs. Transcend Information | Jia Jie vs. Evermore Chemical Industry | Jia Jie vs. Pan Asia Chemical | Jia Jie vs. Mercuries Data Systems |
| ABC Taiwan vs. Nankang Rubber Tire | ABC Taiwan vs. An Shin Food Services | ABC Taiwan vs. Solar Applied Materials | ABC Taiwan vs. Tehmag Foods |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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