Correlation Between Parade Technologies and Amazing Microelectronic
Can any of the company-specific risk be diversified away by investing in both Parade Technologies and Amazing Microelectronic 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 Amazing Microelectronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parade Technologies and Amazing Microelectronic, you can compare the effects of market volatilities on Parade Technologies and Amazing Microelectronic 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 Amazing Microelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parade Technologies and Amazing Microelectronic.
Diversification Opportunities for Parade Technologies and Amazing Microelectronic
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Parade and Amazing is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Parade Technologies and Amazing Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazing Microelectronic 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 Amazing Microelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazing Microelectronic has no effect on the direction of Parade Technologies i.e., Parade Technologies and Amazing Microelectronic go up and down completely randomly.
Pair Corralation between Parade Technologies and Amazing Microelectronic
Assuming the 90 days trading horizon Parade Technologies is expected to generate 1.19 times more return on investment than Amazing Microelectronic. However, Parade Technologies is 1.19 times more volatile than Amazing Microelectronic. It trades about 0.21 of its potential returns per unit of risk. Amazing Microelectronic is currently generating about -0.04 per unit of risk. If you would invest 67,700 in Parade Technologies on September 14, 2024 and sell it today you would earn a total of 6,500 from holding Parade Technologies or generate 9.6% 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. Amazing Microelectronic
Performance |
| Timeline |
| Parade Technologies |
| Amazing Microelectronic |
Parade Technologies and Amazing Microelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parade Technologies and Amazing Microelectronic
The main advantage of trading using opposite Parade Technologies and Amazing Microelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parade Technologies position performs unexpectedly, Amazing Microelectronic 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 Amazing Microelectronic will offset losses from the drop in Amazing Microelectronic's long position.| Parade Technologies vs. WIN Semiconductors | Parade Technologies vs. GlobalWafers Co | Parade Technologies vs. Novatek Microelectronics Corp | Parade Technologies vs. Ruentex Development Co |
| Amazing Microelectronic vs. AU Optronics | Amazing Microelectronic vs. Innolux Corp | Amazing Microelectronic vs. Ruentex Development Co | Amazing Microelectronic vs. WiseChip Semiconductor |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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