Correlation Between Taiwan Surface and Emerging Display
Can any of the company-specific risk be diversified away by investing in both Taiwan Surface and Emerging Display 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 Taiwan Surface and Emerging Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Surface Mounting and Emerging Display Technologies, you can compare the effects of market volatilities on Taiwan Surface and Emerging Display 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 Taiwan Surface with a short position of Emerging Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Surface and Emerging Display.
Diversification Opportunities for Taiwan Surface and Emerging Display
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Emerging is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Surface Mounting and Emerging Display Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Display Tec and Taiwan Surface 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 Taiwan Surface Mounting are associated (or correlated) with Emerging Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Display Tec has no effect on the direction of Taiwan Surface i.e., Taiwan Surface and Emerging Display go up and down completely randomly.
Pair Corralation between Taiwan Surface and Emerging Display
Assuming the 90 days trading horizon Taiwan Surface Mounting is expected to generate 1.3 times more return on investment than Emerging Display. However, Taiwan Surface is 1.3 times more volatile than Emerging Display Technologies. It trades about -0.03 of its potential returns per unit of risk. Emerging Display Technologies is currently generating about -0.08 per unit of risk. If you would invest 11,500 in Taiwan Surface Mounting on September 3, 2024 and sell it today you would lose (1,150) from holding Taiwan Surface Mounting or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Surface Mounting vs. Emerging Display Technologies
Performance |
| Timeline |
| Taiwan Surface Mounting |
| Emerging Display Tec |
Taiwan Surface and Emerging Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Surface and Emerging Display
The main advantage of trading using opposite Taiwan Surface and Emerging Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Surface position performs unexpectedly, Emerging Display 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 Emerging Display will offset losses from the drop in Emerging Display's long position.| Taiwan Surface vs. Unimicron Technology Corp | Taiwan Surface vs. Flexium Interconnect | Taiwan Surface vs. Radiant Opto Electronics Corp | Taiwan Surface vs. Kinsus Interconnect Technology |
| Emerging Display vs. Taiwan Semiconductor Manufacturing | Emerging Display vs. Yang Ming Marine | Emerging Display vs. ASE Industrial Holding | Emerging Display vs. AU Optronics |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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