Correlation Between Abnova Taiwan and Microbio
Can any of the company-specific risk be diversified away by investing in both Abnova Taiwan and Microbio 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 Abnova Taiwan and Microbio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abnova Taiwan Corp and Microbio Co, you can compare the effects of market volatilities on Abnova Taiwan and Microbio 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 Abnova Taiwan with a short position of Microbio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abnova Taiwan and Microbio.
Diversification Opportunities for Abnova Taiwan and Microbio
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Abnova and Microbio is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Abnova Taiwan Corp and Microbio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbio and Abnova Taiwan 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 Abnova Taiwan Corp are associated (or correlated) with Microbio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbio has no effect on the direction of Abnova Taiwan i.e., Abnova Taiwan and Microbio go up and down completely randomly.
Pair Corralation between Abnova Taiwan and Microbio
Assuming the 90 days trading horizon Abnova Taiwan Corp is expected to generate 0.85 times more return on investment than Microbio. However, Abnova Taiwan Corp is 1.17 times less risky than Microbio. It trades about 0.0 of its potential returns per unit of risk. Microbio Co is currently generating about -0.1 per unit of risk. If you would invest 2,970 in Abnova Taiwan Corp on November 5, 2024 and sell it today you would lose (10.00) from holding Abnova Taiwan Corp or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abnova Taiwan Corp vs. Microbio Co
Performance |
| Timeline |
| Abnova Taiwan Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Microbio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Abnova Taiwan and Microbio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abnova Taiwan and Microbio
The main advantage of trading using opposite Abnova Taiwan and Microbio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abnova Taiwan position performs unexpectedly, Microbio 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 Microbio will offset losses from the drop in Microbio's long position.The idea behind Abnova Taiwan Corp and Microbio Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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