Correlation Between Lungyen Life and Deltamac Taiwan
Can any of the company-specific risk be diversified away by investing in both Lungyen Life and Deltamac Taiwan 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 Lungyen Life and Deltamac Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lungyen Life Service and Deltamac Taiwan Co, you can compare the effects of market volatilities on Lungyen Life and Deltamac Taiwan 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 Lungyen Life with a short position of Deltamac Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lungyen Life and Deltamac Taiwan.
Diversification Opportunities for Lungyen Life and Deltamac Taiwan
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lungyen and Deltamac is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lungyen Life Service and Deltamac Taiwan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltamac Taiwan and Lungyen Life 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 Lungyen Life Service are associated (or correlated) with Deltamac Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltamac Taiwan has no effect on the direction of Lungyen Life i.e., Lungyen Life and Deltamac Taiwan go up and down completely randomly.
Pair Corralation between Lungyen Life and Deltamac Taiwan
Assuming the 90 days trading horizon Lungyen Life Service is expected to under-perform the Deltamac Taiwan. But the stock apears to be less risky and, when comparing its historical volatility, Lungyen Life Service is 5.81 times less risky than Deltamac Taiwan. The stock trades about -0.22 of its potential returns per unit of risk. The Deltamac Taiwan Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,545 in Deltamac Taiwan Co on October 20, 2024 and sell it today you would lose (285.00) from holding Deltamac Taiwan Co or give up 8.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lungyen Life Service vs. Deltamac Taiwan Co
Performance |
| Timeline |
| Lungyen Life Service |
| Deltamac Taiwan |
Lungyen Life and Deltamac Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lungyen Life and Deltamac Taiwan
The main advantage of trading using opposite Lungyen Life and Deltamac Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lungyen Life position performs unexpectedly, Deltamac Taiwan 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 Deltamac Taiwan will offset losses from the drop in Deltamac Taiwan's long position.| Lungyen Life vs. Cleanaway Co | Lungyen Life vs. StShine Optical Co | Lungyen Life vs. Formosa International Hotels | Lungyen Life vs. Poya International Co |
| Deltamac Taiwan vs. Pili International Multimedia | Deltamac Taiwan vs. Taiwan Semiconductor Manufacturing | Deltamac Taiwan vs. CTBC Financial Holding | Deltamac Taiwan vs. Hota Industrial Mfg |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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