Correlation Between Chung Lien and RDC Semiconductor
Can any of the company-specific risk be diversified away by investing in both Chung Lien and RDC Semiconductor 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 Chung Lien and RDC Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Lien Transportation and RDC Semiconductor Co, you can compare the effects of market volatilities on Chung Lien and RDC Semiconductor 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 Chung Lien with a short position of RDC Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and RDC Semiconductor.
Diversification Opportunities for Chung Lien and RDC Semiconductor
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chung and RDC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and RDC Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RDC Semiconductor and Chung Lien 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 Chung Lien Transportation are associated (or correlated) with RDC Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RDC Semiconductor has no effect on the direction of Chung Lien i.e., Chung Lien and RDC Semiconductor go up and down completely randomly.
Pair Corralation between Chung Lien and RDC Semiconductor
Assuming the 90 days trading horizon Chung Lien Transportation is expected to generate 0.2 times more return on investment than RDC Semiconductor. However, Chung Lien Transportation is 5.1 times less risky than RDC Semiconductor. It trades about 0.04 of its potential returns per unit of risk. RDC Semiconductor Co is currently generating about -0.11 per unit of risk. If you would invest 4,125 in Chung Lien Transportation on August 28, 2024 and sell it today you would earn a total of 135.00 from holding Chung Lien Transportation or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Lien Transportation vs. RDC Semiconductor Co
Performance |
| Timeline |
| Chung Lien Transportation |
| RDC Semiconductor |
Chung Lien and RDC Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and RDC Semiconductor
The main advantage of trading using opposite Chung Lien and RDC Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, RDC Semiconductor 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 RDC Semiconductor will offset losses from the drop in RDC Semiconductor's long position.| Chung Lien vs. Kerry TJ Logistics | Chung Lien vs. Shan Loong Transportation Co | Chung Lien vs. YuantaP shares Taiwan Mid Cap | Chung Lien vs. YuantaP shares Taiwan Electronics |
| RDC Semiconductor vs. Global Unichip Corp | RDC Semiconductor vs. Asmedia Technology | RDC Semiconductor vs. Unimicron Technology Corp | RDC Semiconductor vs. Novatek Microelectronics Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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