Correlation Between Promate Electronic and Taiwan Secom
Can any of the company-specific risk be diversified away by investing in both Promate Electronic and Taiwan Secom 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 Promate Electronic and Taiwan Secom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promate Electronic Co and Taiwan Secom Co, you can compare the effects of market volatilities on Promate Electronic and Taiwan Secom 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 Promate Electronic with a short position of Taiwan Secom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promate Electronic and Taiwan Secom.
Diversification Opportunities for Promate Electronic and Taiwan Secom
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Promate and Taiwan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Promate Electronic Co and Taiwan Secom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Secom and Promate Electronic 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 Promate Electronic Co are associated (or correlated) with Taiwan Secom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Secom has no effect on the direction of Promate Electronic i.e., Promate Electronic and Taiwan Secom go up and down completely randomly.
Pair Corralation between Promate Electronic and Taiwan Secom
Assuming the 90 days trading horizon Promate Electronic Co is expected to generate 0.91 times more return on investment than Taiwan Secom. However, Promate Electronic Co is 1.1 times less risky than Taiwan Secom. It trades about -0.13 of its potential returns per unit of risk. Taiwan Secom Co is currently generating about -0.13 per unit of risk. If you would invest 8,100 in Promate Electronic Co on October 26, 2024 and sell it today you would lose (260.00) from holding Promate Electronic Co or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Promate Electronic Co vs. Taiwan Secom Co
Performance |
| Timeline |
| Promate Electronic |
| Taiwan Secom |
Promate Electronic and Taiwan Secom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promate Electronic and Taiwan Secom
The main advantage of trading using opposite Promate Electronic and Taiwan Secom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promate Electronic position performs unexpectedly, Taiwan Secom 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 Secom will offset losses from the drop in Taiwan Secom's long position.| Promate Electronic vs. WPG Holdings | Promate Electronic vs. Topco Scientific Co | Promate Electronic vs. E Life Mall Corp | Promate Electronic vs. Lumax International Corp |
| Taiwan Secom vs. Taiwan Shin Kong | Taiwan Secom vs. President Chain Store | Taiwan Secom vs. Yulon Finance Corp | Taiwan Secom vs. Giant Manufacturing Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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