Correlation Between Taiwan Surface and Chia Chang
Can any of the company-specific risk be diversified away by investing in both Taiwan Surface and Chia Chang 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 Chia Chang 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 Chia Chang Co, you can compare the effects of market volatilities on Taiwan Surface and Chia Chang 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 Chia Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Surface and Chia Chang.
Diversification Opportunities for Taiwan Surface and Chia Chang
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Chia is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Surface Mounting and Chia Chang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Chang 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 Chia Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Chang has no effect on the direction of Taiwan Surface i.e., Taiwan Surface and Chia Chang go up and down completely randomly.
Pair Corralation between Taiwan Surface and Chia Chang
Assuming the 90 days trading horizon Taiwan Surface Mounting is expected to generate 1.77 times more return on investment than Chia Chang. However, Taiwan Surface is 1.77 times more volatile than Chia Chang Co. It trades about -0.03 of its potential returns per unit of risk. Chia Chang Co is currently generating about -0.06 per unit of risk. If you would invest 11,800 in Taiwan Surface Mounting on September 3, 2024 and sell it today you would lose (1,450) from holding Taiwan Surface Mounting or give up 12.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Surface Mounting vs. Chia Chang Co
Performance |
| Timeline |
| Taiwan Surface Mounting |
| Chia Chang |
Taiwan Surface and Chia Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Surface and Chia Chang
The main advantage of trading using opposite Taiwan Surface and Chia Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Surface position performs unexpectedly, Chia Chang 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 Chia Chang will offset losses from the drop in Chia Chang'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 |
| Chia Chang vs. FSP Technology | Chia Chang vs. HannStar Board Corp | Chia Chang vs. Taiwan Surface Mounting | Chia Chang vs. Emerging Display Technologies |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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