Correlation Between Taiwan Surface and General Interface
Can any of the company-specific risk be diversified away by investing in both Taiwan Surface and General Interface 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 General Interface 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 General Interface Solution, you can compare the effects of market volatilities on Taiwan Surface and General Interface 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 General Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Surface and General Interface.
Diversification Opportunities for Taiwan Surface and General Interface
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and General is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Surface Mounting and General Interface Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Interface 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 General Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Interface has no effect on the direction of Taiwan Surface i.e., Taiwan Surface and General Interface go up and down completely randomly.
Pair Corralation between Taiwan Surface and General Interface
Assuming the 90 days trading horizon Taiwan Surface Mounting is expected to generate 1.09 times more return on investment than General Interface. However, Taiwan Surface is 1.09 times more volatile than General Interface Solution. It trades about 0.01 of its potential returns per unit of risk. General Interface Solution is currently generating about -0.06 per unit of risk. If you would invest 10,200 in Taiwan Surface Mounting on September 4, 2024 and sell it today you would earn a total of 150.00 from holding Taiwan Surface Mounting or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Taiwan Surface Mounting vs. General Interface Solution
Performance |
| Timeline |
| Taiwan Surface Mounting |
| General Interface |
Taiwan Surface and General Interface Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Surface and General Interface
The main advantage of trading using opposite Taiwan Surface and General Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Surface position performs unexpectedly, General Interface 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 General Interface will offset losses from the drop in General Interface'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 |
| General Interface vs. Zhen Ding Technology | General Interface vs. TPK Holding Co | General Interface vs. Catcher Technology Co | General Interface vs. Flexium Interconnect |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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