Correlation Between Te Chang and Actron Technology
Can any of the company-specific risk be diversified away by investing in both Te Chang and Actron Technology 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 Te Chang and Actron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Te Chang Construction and Actron Technology, you can compare the effects of market volatilities on Te Chang and Actron Technology 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 Te Chang with a short position of Actron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Te Chang and Actron Technology.
Diversification Opportunities for Te Chang and Actron Technology
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 5511 and Actron is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Te Chang Construction and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron Technology and Te Chang 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 Te Chang Construction are associated (or correlated) with Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of Te Chang i.e., Te Chang and Actron Technology go up and down completely randomly.
Pair Corralation between Te Chang and Actron Technology
Assuming the 90 days trading horizon Te Chang Construction is expected to under-perform the Actron Technology. But the stock apears to be less risky and, when comparing its historical volatility, Te Chang Construction is 1.15 times less risky than Actron Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Actron Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 16,400 in Actron Technology on September 2, 2024 and sell it today you would lose (100.00) from holding Actron Technology or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Te Chang Construction vs. Actron Technology
Performance |
| Timeline |
| Te Chang Construction |
| Actron Technology |
Te Chang and Actron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Te Chang and Actron Technology
The main advantage of trading using opposite Te Chang and Actron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Te Chang position performs unexpectedly, Actron Technology 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 Actron Technology will offset losses from the drop in Actron Technology's long position.| Te Chang vs. Grand Ocean Retail | Te Chang vs. Simplo Technology Co | Te Chang vs. Jia Jie Biomedical | Te Chang vs. Microtips Technology |
| Actron Technology vs. Hota Industrial Mfg | Actron Technology vs. BizLink Holding | Actron Technology vs. Cub Elecparts | Actron Technology vs. Hu Lane Associate |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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