Correlation Between Pegatron Corp and New Advanced
Can any of the company-specific risk be diversified away by investing in both Pegatron Corp and New Advanced 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 Pegatron Corp and New Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pegatron Corp and New Advanced Electronics, you can compare the effects of market volatilities on Pegatron Corp and New Advanced 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 Pegatron Corp with a short position of New Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pegatron Corp and New Advanced.
Diversification Opportunities for Pegatron Corp and New Advanced
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pegatron and New is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pegatron Corp and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced Electronics and Pegatron Corp 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 Pegatron Corp are associated (or correlated) with New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of Pegatron Corp i.e., Pegatron Corp and New Advanced go up and down completely randomly.
Pair Corralation between Pegatron Corp and New Advanced
Assuming the 90 days trading horizon Pegatron Corp is expected to generate 0.68 times more return on investment than New Advanced. However, Pegatron Corp is 1.48 times less risky than New Advanced. It trades about -0.16 of its potential returns per unit of risk. New Advanced Electronics is currently generating about -0.24 per unit of risk. If you would invest 10,300 in Pegatron Corp on August 26, 2024 and sell it today you would lose (540.00) from holding Pegatron Corp or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pegatron Corp vs. New Advanced Electronics
Performance |
| Timeline |
| Pegatron Corp |
| New Advanced Electronics |
Pegatron Corp and New Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pegatron Corp and New Advanced
The main advantage of trading using opposite Pegatron Corp and New Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pegatron Corp position performs unexpectedly, New Advanced 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 New Advanced will offset losses from the drop in New Advanced's long position.| Pegatron Corp vs. Wistron Corp | Pegatron Corp vs. Quanta Computer | Pegatron Corp vs. Compal Electronics | Pegatron Corp vs. Catcher Technology Co |
| New Advanced vs. Advantech Co | New Advanced vs. IEI Integration Corp | New Advanced vs. Flytech Technology Co | New Advanced vs. ADLINK Technology |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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