Correlation Between Parade Technologies and Taiwan IC
Can any of the company-specific risk be diversified away by investing in both Parade Technologies and Taiwan IC 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 IC 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 IC Packaging, you can compare the effects of market volatilities on Parade Technologies and Taiwan IC 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 IC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parade Technologies and Taiwan IC.
Diversification Opportunities for Parade Technologies and Taiwan IC
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parade and Taiwan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Parade Technologies and Taiwan IC Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan IC Packaging 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 IC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan IC Packaging has no effect on the direction of Parade Technologies i.e., Parade Technologies and Taiwan IC go up and down completely randomly.
Pair Corralation between Parade Technologies and Taiwan IC
Assuming the 90 days trading horizon Parade Technologies is expected to generate 1.32 times more return on investment than Taiwan IC. However, Parade Technologies is 1.32 times more volatile than Taiwan IC Packaging. It trades about 0.07 of its potential returns per unit of risk. Taiwan IC Packaging is currently generating about -0.37 per unit of risk. If you would invest 67,600 in Parade Technologies on September 2, 2024 and sell it today you would earn a total of 1,900 from holding Parade Technologies or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parade Technologies vs. Taiwan IC Packaging
Performance |
| Timeline |
| Parade Technologies |
| Taiwan IC Packaging |
Parade Technologies and Taiwan IC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parade Technologies and Taiwan IC
The main advantage of trading using opposite Parade Technologies and Taiwan IC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parade Technologies position performs unexpectedly, Taiwan IC 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 IC will offset losses from the drop in Taiwan IC'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 IC vs. Excelsior Medical Co | Taiwan IC vs. Winstek Semiconductor Co | Taiwan IC vs. Simple Mart Retail | Taiwan IC vs. Li Kang Biomedical |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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