Correlation Between Ingentec and Tai Tung
Can any of the company-specific risk be diversified away by investing in both Ingentec 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 Ingentec and Tai Tung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingentec and Tai Tung Communication, you can compare the effects of market volatilities on Ingentec 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 Ingentec with a short position of Tai Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingentec and Tai Tung.
Diversification Opportunities for Ingentec and Tai Tung
Poor diversification
The 3 months correlation between Ingentec and Tai is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ingentec 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 Ingentec 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 Ingentec 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 Ingentec i.e., Ingentec and Tai Tung go up and down completely randomly.
Pair Corralation between Ingentec and Tai Tung
Assuming the 90 days trading horizon Ingentec is expected to generate 1.37 times more return on investment than Tai Tung. However, Ingentec is 1.37 times more volatile than Tai Tung Communication. It trades about 0.08 of its potential returns per unit of risk. Tai Tung Communication is currently generating about -0.36 per unit of risk. If you would invest 17,500 in Ingentec on October 21, 2024 and sell it today you would earn a total of 500.00 from holding Ingentec or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingentec vs. Tai Tung Communication
Performance |
| Timeline |
| Ingentec |
| Tai Tung Communication |
Ingentec and Tai Tung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingentec and Tai Tung
The main advantage of trading using opposite Ingentec and Tai Tung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingentec 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.| Ingentec vs. Powerchip Semiconductor Manufacturing | Ingentec vs. RDC Semiconductor Co | Ingentec vs. Dimension Computer Technology | Ingentec vs. Wonderful Hi Tech Co |
| Tai Tung vs. Zinwell | Tai Tung vs. Mercuries Life Insurance | Tai Tung vs. Darwin Precisions Corp | Tai Tung vs. Jinli Group Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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