Correlation Between Dimension Computer and Taichung Commercial
Can any of the company-specific risk be diversified away by investing in both Dimension Computer and Taichung Commercial 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 Dimension Computer and Taichung Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimension Computer Technology and Taichung Commercial Bank, you can compare the effects of market volatilities on Dimension Computer and Taichung Commercial 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 Dimension Computer with a short position of Taichung Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimension Computer and Taichung Commercial.
Diversification Opportunities for Dimension Computer and Taichung Commercial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dimension and Taichung is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dimension Computer Technology and Taichung Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taichung Commercial Bank and Dimension Computer 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 Dimension Computer Technology are associated (or correlated) with Taichung Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taichung Commercial Bank has no effect on the direction of Dimension Computer i.e., Dimension Computer and Taichung Commercial go up and down completely randomly.
Pair Corralation between Dimension Computer and Taichung Commercial
Assuming the 90 days trading horizon Dimension Computer is expected to generate 1.38 times less return on investment than Taichung Commercial. In addition to that, Dimension Computer is 3.61 times more volatile than Taichung Commercial Bank. It trades about 0.01 of its total potential returns per unit of risk. Taichung Commercial Bank is currently generating about 0.05 per unit of volatility. If you would invest 1,815 in Taichung Commercial Bank on November 2, 2024 and sell it today you would earn a total of 75.00 from holding Taichung Commercial Bank or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimension Computer Technology vs. Taichung Commercial Bank
Performance |
| Timeline |
| Dimension Computer |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Taichung Commercial Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Dimension Computer and Taichung Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimension Computer and Taichung Commercial
The main advantage of trading using opposite Dimension Computer and Taichung Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimension Computer position performs unexpectedly, Taichung Commercial 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 Taichung Commercial will offset losses from the drop in Taichung Commercial's long position.The idea behind Dimension Computer Technology and Taichung Commercial Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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