Correlation Between Taiwan Speciality and Advanced Analog
Can any of the company-specific risk be diversified away by investing in both Taiwan Speciality and Advanced Analog 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 Taiwan Speciality and Advanced Analog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Speciality Chemicals and Advanced Analog Technology, you can compare the effects of market volatilities on Taiwan Speciality and Advanced Analog 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 Taiwan Speciality with a short position of Advanced Analog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Speciality and Advanced Analog.
Diversification Opportunities for Taiwan Speciality and Advanced Analog
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Advanced is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Speciality Chemicals and Advanced Analog Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Analog Tech and Taiwan Speciality 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 Taiwan Speciality Chemicals are associated (or correlated) with Advanced Analog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Analog Tech has no effect on the direction of Taiwan Speciality i.e., Taiwan Speciality and Advanced Analog go up and down completely randomly.
Pair Corralation between Taiwan Speciality and Advanced Analog
Assuming the 90 days trading horizon Taiwan Speciality Chemicals is expected to under-perform the Advanced Analog. In addition to that, Taiwan Speciality is 1.07 times more volatile than Advanced Analog Technology. It trades about -0.14 of its total potential returns per unit of risk. Advanced Analog Technology is currently generating about -0.11 per unit of volatility. If you would invest 6,990 in Advanced Analog Technology on September 15, 2024 and sell it today you would lose (290.00) from holding Advanced Analog Technology or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Speciality Chemicals vs. Advanced Analog Technology
Performance |
| Timeline |
| Taiwan Speciality |
| Advanced Analog Tech |
Taiwan Speciality and Advanced Analog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Speciality and Advanced Analog
The main advantage of trading using opposite Taiwan Speciality and Advanced Analog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Speciality position performs unexpectedly, Advanced Analog 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 Advanced Analog will offset losses from the drop in Advanced Analog's long position.| Taiwan Speciality vs. Taiwan Semiconductor Manufacturing | Taiwan Speciality vs. Hon Hai Precision | Taiwan Speciality vs. MediaTek | Taiwan Speciality vs. Chunghwa Telecom Co |
| Advanced Analog vs. U Tech Media Corp | Advanced Analog vs. Eastern Media International | Advanced Analog vs. Dynamic Medical Technologies | Advanced Analog vs. Holiday Entertainment Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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