Correlation Between Parade Technologies and Taiwan Cement
Can any of the company-specific risk be diversified away by investing in both Parade Technologies and Taiwan Cement 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 Parade Technologies and Taiwan Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parade Technologies and Taiwan Cement Corp, you can compare the effects of market volatilities on Parade Technologies and Taiwan Cement 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 Parade Technologies with a short position of Taiwan Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parade Technologies and Taiwan Cement.
Diversification Opportunities for Parade Technologies and Taiwan Cement
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parade and Taiwan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Parade Technologies and Taiwan Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cement Corp and Parade Technologies 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 Parade Technologies are associated (or correlated) with Taiwan Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cement Corp has no effect on the direction of Parade Technologies i.e., Parade Technologies and Taiwan Cement go up and down completely randomly.
Pair Corralation between Parade Technologies and Taiwan Cement
Assuming the 90 days trading horizon Parade Technologies is expected to under-perform the Taiwan Cement. In addition to that, Parade Technologies is 17.29 times more volatile than Taiwan Cement Corp. It trades about -0.03 of its total potential returns per unit of risk. Taiwan Cement Corp is currently generating about 0.0 per unit of volatility. If you would invest 4,664 in Taiwan Cement Corp on September 1, 2024 and sell it today you would lose (4.00) from holding Taiwan Cement Corp or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parade Technologies vs. Taiwan Cement Corp
Performance |
| Timeline |
| Parade Technologies |
| Taiwan Cement Corp |
Parade Technologies and Taiwan Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parade Technologies and Taiwan Cement
The main advantage of trading using opposite Parade Technologies and Taiwan Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parade Technologies position performs unexpectedly, Taiwan Cement 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 Taiwan Cement will offset losses from the drop in Taiwan Cement's long position.| Parade Technologies vs. Aspeed Technology | Parade Technologies vs. Silergy Corp | Parade Technologies vs. Novatek Microelectronics Corp | Parade Technologies vs. WIN Semiconductors |
| Taiwan Cement vs. LandMark Optoelectronics | Taiwan Cement vs. FDC International Hotels | Taiwan Cement vs. Microelectronics Technology | Taiwan Cement vs. Voltronic Power 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 CEOs Directory module to screen CEOs from public companies around the world.
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