Correlation Between Chipbond Technology and MPI
Can any of the company-specific risk be diversified away by investing in both Chipbond Technology and MPI 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 Chipbond Technology and MPI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chipbond Technology and MPI Corporation, you can compare the effects of market volatilities on Chipbond Technology and MPI 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 Chipbond Technology with a short position of MPI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chipbond Technology and MPI.
Diversification Opportunities for Chipbond Technology and MPI
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chipbond and MPI is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chipbond Technology and MPI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPI Corporation and Chipbond Technology 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 Chipbond Technology are associated (or correlated) with MPI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPI Corporation has no effect on the direction of Chipbond Technology i.e., Chipbond Technology and MPI go up and down completely randomly.
Pair Corralation between Chipbond Technology and MPI
Assuming the 90 days trading horizon Chipbond Technology is expected to generate 7.18 times less return on investment than MPI. But when comparing it to its historical volatility, Chipbond Technology is 3.05 times less risky than MPI. It trades about 0.03 of its potential returns per unit of risk. MPI Corporation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 81,900 in MPI Corporation on September 12, 2024 and sell it today you would earn a total of 4,400 from holding MPI Corporation or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chipbond Technology vs. MPI Corp.
Performance |
| Timeline |
| Chipbond Technology |
| MPI Corporation |
Chipbond Technology and MPI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chipbond Technology and MPI
The main advantage of trading using opposite Chipbond Technology and MPI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chipbond Technology position performs unexpectedly, MPI 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 MPI will offset losses from the drop in MPI's long position.| Chipbond Technology vs. WIN Semiconductors | Chipbond Technology vs. GlobalWafers Co | Chipbond Technology vs. Novatek Microelectronics Corp | Chipbond Technology vs. Ruentex Development Co |
| MPI vs. Novatek Microelectronics Corp | MPI vs. King Yuan Electronics | MPI vs. Wafer Works | MPI vs. Chipbond Technology |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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