Correlation Between Taiwan Allied and STL Technology
Can any of the company-specific risk be diversified away by investing in both Taiwan Allied and STL 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 Taiwan Allied and STL Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Allied Container and STL Technology Co, you can compare the effects of market volatilities on Taiwan Allied and STL 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 Taiwan Allied with a short position of STL Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Allied and STL Technology.
Diversification Opportunities for Taiwan Allied and STL Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and STL is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Allied Container and STL Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STL Technology and Taiwan Allied 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 Taiwan Allied Container are associated (or correlated) with STL Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STL Technology has no effect on the direction of Taiwan Allied i.e., Taiwan Allied and STL Technology go up and down completely randomly.
Pair Corralation between Taiwan Allied and STL Technology
Assuming the 90 days trading horizon Taiwan Allied is expected to generate 4.06 times less return on investment than STL Technology. But when comparing it to its historical volatility, Taiwan Allied Container is 1.48 times less risky than STL Technology. It trades about 0.01 of its potential returns per unit of risk. STL Technology Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,054 in STL Technology Co on September 5, 2024 and sell it today you would earn a total of 1,416 from holding STL Technology Co or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Allied Container vs. STL Technology Co
Performance |
| Timeline |
| Taiwan Allied Container |
| STL Technology |
Taiwan Allied and STL Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Allied and STL Technology
The main advantage of trading using opposite Taiwan Allied and STL Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Allied position performs unexpectedly, STL 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 STL Technology will offset losses from the drop in STL Technology's long position.| Taiwan Allied vs. STL Technology Co | Taiwan Allied vs. Highlight Tech | Taiwan Allied vs. Simplo Technology Co | Taiwan Allied vs. GeneReach Biotechnology |
| STL Technology vs. Eclat Textile Co | STL Technology vs. WiseChip Semiconductor | STL Technology vs. Novatek Microelectronics Corp | STL Technology vs. Leader Electronics |
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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