Correlation Between Amazing Microelectronic and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both Amazing Microelectronic and ABC Taiwan 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 Amazing Microelectronic and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazing Microelectronic and ABC Taiwan Electronics, you can compare the effects of market volatilities on Amazing Microelectronic and ABC Taiwan 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 Amazing Microelectronic with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazing Microelectronic and ABC Taiwan.
Diversification Opportunities for Amazing Microelectronic and ABC Taiwan
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Amazing and ABC is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Amazing Microelectronic and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics and Amazing Microelectronic 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 Amazing Microelectronic are associated (or correlated) with ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of Amazing Microelectronic i.e., Amazing Microelectronic and ABC Taiwan go up and down completely randomly.
Pair Corralation between Amazing Microelectronic and ABC Taiwan
Assuming the 90 days trading horizon Amazing Microelectronic is expected to under-perform the ABC Taiwan. In addition to that, Amazing Microelectronic is 1.19 times more volatile than ABC Taiwan Electronics. It trades about -0.12 of its total potential returns per unit of risk. ABC Taiwan Electronics is currently generating about 0.18 per unit of volatility. If you would invest 2,185 in ABC Taiwan Electronics on September 1, 2024 and sell it today you would earn a total of 110.00 from holding ABC Taiwan Electronics or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazing Microelectronic vs. ABC Taiwan Electronics
Performance |
| Timeline |
| Amazing Microelectronic |
| ABC Taiwan Electronics |
Amazing Microelectronic and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazing Microelectronic and ABC Taiwan
The main advantage of trading using opposite Amazing Microelectronic and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazing Microelectronic position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's long position.| Amazing Microelectronic vs. United Microelectronics | Amazing Microelectronic vs. Winbond Electronics Corp |
| ABC Taiwan vs. Chinese Maritime Transport | ABC Taiwan vs. Founding Construction Development | ABC Taiwan vs. Dawushan Farm Tech | ABC Taiwan vs. Chung Hsin Electric Machinery |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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