Correlation Between Leatec Fine and Taiwan Cogeneration
Can any of the company-specific risk be diversified away by investing in both Leatec Fine and Taiwan Cogeneration 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 Leatec Fine and Taiwan Cogeneration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leatec Fine Ceramics and Taiwan Cogeneration Corp, you can compare the effects of market volatilities on Leatec Fine and Taiwan Cogeneration 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 Leatec Fine with a short position of Taiwan Cogeneration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leatec Fine and Taiwan Cogeneration.
Diversification Opportunities for Leatec Fine and Taiwan Cogeneration
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leatec and Taiwan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics and Taiwan Cogeneration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cogeneration Corp and Leatec Fine 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 Leatec Fine Ceramics are associated (or correlated) with Taiwan Cogeneration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cogeneration Corp has no effect on the direction of Leatec Fine i.e., Leatec Fine and Taiwan Cogeneration go up and down completely randomly.
Pair Corralation between Leatec Fine and Taiwan Cogeneration
Assuming the 90 days trading horizon Leatec Fine Ceramics is expected to under-perform the Taiwan Cogeneration. In addition to that, Leatec Fine is 2.19 times more volatile than Taiwan Cogeneration Corp. It trades about -0.05 of its total potential returns per unit of risk. Taiwan Cogeneration Corp is currently generating about 0.0 per unit of volatility. If you would invest 4,330 in Taiwan Cogeneration Corp on August 28, 2024 and sell it today you would lose (5.00) from holding Taiwan Cogeneration Corp or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leatec Fine Ceramics vs. Taiwan Cogeneration Corp
Performance |
| Timeline |
| Leatec Fine Ceramics |
| Taiwan Cogeneration Corp |
Leatec Fine and Taiwan Cogeneration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leatec Fine and Taiwan Cogeneration
The main advantage of trading using opposite Leatec Fine and Taiwan Cogeneration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leatec Fine position performs unexpectedly, Taiwan Cogeneration 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 Taiwan Cogeneration will offset losses from the drop in Taiwan Cogeneration's long position.| Leatec Fine vs. Global Unichip Corp | Leatec Fine vs. Asmedia Technology | Leatec Fine vs. Unimicron Technology Corp | Leatec Fine vs. Novatek Microelectronics Corp |
| Taiwan Cogeneration vs. Taiwan Secom Co | Taiwan Cogeneration vs. Taiwan Shin Kong | Taiwan Cogeneration vs. Leatec Fine Ceramics | Taiwan Cogeneration vs. Information Technology Total |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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