Correlation Between Baotek Industrial and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Baotek Industrial and Lien Chang 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 Baotek Industrial and Lien Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baotek Industrial Materials and Lien Chang Electronic, you can compare the effects of market volatilities on Baotek Industrial and Lien Chang 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 Baotek Industrial with a short position of Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baotek Industrial and Lien Chang.
Diversification Opportunities for Baotek Industrial and Lien Chang
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baotek and Lien is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Baotek Industrial Materials and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic and Baotek Industrial 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 Baotek Industrial Materials are associated (or correlated) with Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Baotek Industrial i.e., Baotek Industrial and Lien Chang go up and down completely randomly.
Pair Corralation between Baotek Industrial and Lien Chang
Assuming the 90 days trading horizon Baotek Industrial Materials is expected to generate 1.55 times more return on investment than Lien Chang. However, Baotek Industrial is 1.55 times more volatile than Lien Chang Electronic. It trades about 0.05 of its potential returns per unit of risk. Lien Chang Electronic is currently generating about 0.05 per unit of risk. If you would invest 2,500 in Baotek Industrial Materials on September 3, 2024 and sell it today you would earn a total of 1,895 from holding Baotek Industrial Materials or generate 75.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Baotek Industrial Materials vs. Lien Chang Electronic
Performance |
| Timeline |
| Baotek Industrial |
| Lien Chang Electronic |
Baotek Industrial and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baotek Industrial and Lien Chang
The main advantage of trading using opposite Baotek Industrial and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baotek Industrial position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang's long position.| Baotek Industrial vs. Far Eastern New | Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Formosa Taffeta Co |
| Lien Chang vs. Taiwan Semiconductor Manufacturing | Lien Chang vs. Yang Ming Marine | Lien Chang vs. ASE Industrial Holding | Lien Chang vs. AU Optronics |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |