Correlation Between ITEQ Corp and New Era
Can any of the company-specific risk be diversified away by investing in both ITEQ Corp and New Era 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 ITEQ Corp and New Era into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITEQ Corp and New Era Electronics, you can compare the effects of market volatilities on ITEQ Corp and New Era 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 ITEQ Corp with a short position of New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITEQ Corp and New Era.
Diversification Opportunities for ITEQ Corp and New Era
Very good diversification
The 3 months correlation between ITEQ and New is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ITEQ Corp and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics and ITEQ Corp 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 ITEQ Corp are associated (or correlated) with New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of ITEQ Corp i.e., ITEQ Corp and New Era go up and down completely randomly.
Pair Corralation between ITEQ Corp and New Era
Assuming the 90 days trading horizon ITEQ Corp is expected to under-perform the New Era. But the stock apears to be less risky and, when comparing its historical volatility, ITEQ Corp is 1.61 times less risky than New Era. The stock trades about -0.01 of its potential returns per unit of risk. The New Era Electronics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,345 in New Era Electronics on September 4, 2024 and sell it today you would earn a total of 9,855 from holding New Era Electronics or generate 420.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITEQ Corp vs. New Era Electronics
Performance |
| Timeline |
| ITEQ Corp |
| New Era Electronics |
ITEQ Corp and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITEQ Corp and New Era
The main advantage of trading using opposite ITEQ Corp and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITEQ Corp position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| ITEQ Corp vs. Taiwan Semiconductor Manufacturing | ITEQ Corp vs. Yang Ming Marine | ITEQ Corp vs. ASE Industrial Holding | ITEQ Corp vs. AU Optronics |
| New Era vs. Unimicron Technology Corp | New Era vs. Nan Ya Printed | New Era vs. Elite Material Co | New Era vs. Compeq 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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