Correlation Between Excellence Optoelectronic and Holtek Semiconductor
Can any of the company-specific risk be diversified away by investing in both Excellence Optoelectronic and Holtek Semiconductor 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 Excellence Optoelectronic and Holtek Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excellence Optoelectronic and Holtek Semiconductor, you can compare the effects of market volatilities on Excellence Optoelectronic and Holtek Semiconductor 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 Excellence Optoelectronic with a short position of Holtek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellence Optoelectronic and Holtek Semiconductor.
Diversification Opportunities for Excellence Optoelectronic and Holtek Semiconductor
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Excellence and Holtek is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Excellence Optoelectronic and Holtek Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holtek Semiconductor and Excellence Optoelectronic 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 Excellence Optoelectronic are associated (or correlated) with Holtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holtek Semiconductor has no effect on the direction of Excellence Optoelectronic i.e., Excellence Optoelectronic and Holtek Semiconductor go up and down completely randomly.
Pair Corralation between Excellence Optoelectronic and Holtek Semiconductor
Assuming the 90 days trading horizon Excellence Optoelectronic is expected to generate 1.29 times more return on investment than Holtek Semiconductor. However, Excellence Optoelectronic is 1.29 times more volatile than Holtek Semiconductor. It trades about 0.01 of its potential returns per unit of risk. Holtek Semiconductor is currently generating about -0.02 per unit of risk. If you would invest 2,697 in Excellence Optoelectronic on November 19, 2024 and sell it today you would earn a total of 8.00 from holding Excellence Optoelectronic or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Excellence Optoelectronic vs. Holtek Semiconductor
Performance |
| Timeline |
| Excellence Optoelectronic |
| Holtek Semiconductor |
Excellence Optoelectronic and Holtek Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excellence Optoelectronic and Holtek Semiconductor
The main advantage of trading using opposite Excellence Optoelectronic and Holtek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excellence Optoelectronic position performs unexpectedly, Holtek Semiconductor 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 Holtek Semiconductor will offset losses from the drop in Holtek Semiconductor's long position.| Excellence Optoelectronic vs. Hota Industrial Mfg | Excellence Optoelectronic vs. BizLink Holding | Excellence Optoelectronic vs. Tong Hsing Electronic | Excellence Optoelectronic vs. SDI Corp |
| Holtek Semiconductor vs. Novatek Microelectronics Corp | Holtek Semiconductor vs. Realtek Semiconductor Corp | Holtek Semiconductor vs. Nuvoton Technology Corp | Holtek Semiconductor vs. Global Unichip Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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