Correlation Between Taiwan Taomee and Ichia Technologies
Can any of the company-specific risk be diversified away by investing in both Taiwan Taomee and Ichia Technologies 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 Taomee and Ichia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Taomee Co and Ichia Technologies, you can compare the effects of market volatilities on Taiwan Taomee and Ichia Technologies 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 Taomee with a short position of Ichia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Taomee and Ichia Technologies.
Diversification Opportunities for Taiwan Taomee and Ichia Technologies
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Ichia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Taomee Co and Ichia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichia Technologies and Taiwan Taomee 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 Taomee Co are associated (or correlated) with Ichia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichia Technologies has no effect on the direction of Taiwan Taomee i.e., Taiwan Taomee and Ichia Technologies go up and down completely randomly.
Pair Corralation between Taiwan Taomee and Ichia Technologies
Assuming the 90 days trading horizon Taiwan Taomee is expected to generate 1.68 times less return on investment than Ichia Technologies. In addition to that, Taiwan Taomee is 1.12 times more volatile than Ichia Technologies. It trades about 0.01 of its total potential returns per unit of risk. Ichia Technologies is currently generating about 0.02 per unit of volatility. If you would invest 3,588 in Ichia Technologies on September 12, 2024 and sell it today you would earn a total of 332.00 from holding Ichia Technologies or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.69% |
| Values | Daily Returns |
Taiwan Taomee Co vs. Ichia Technologies
Performance |
| Timeline |
| Taiwan Taomee |
| Ichia Technologies |
Taiwan Taomee and Ichia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Taomee and Ichia Technologies
The main advantage of trading using opposite Taiwan Taomee and Ichia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Taomee position performs unexpectedly, Ichia Technologies 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 Ichia Technologies will offset losses from the drop in Ichia Technologies' long position.| Taiwan Taomee vs. Taishin Financial Holding | Taiwan Taomee vs. PChome Online | Taiwan Taomee vs. Fubon Financial Holding | Taiwan Taomee vs. Hua Nan Financial |
| Ichia Technologies vs. AU Optronics | Ichia Technologies vs. Innolux Corp | Ichia Technologies vs. Ruentex Development Co | Ichia Technologies vs. WiseChip Semiconductor |
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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