Correlation Between Dawushan Farm and Alchip Technologies
Can any of the company-specific risk be diversified away by investing in both Dawushan Farm and Alchip 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 Dawushan Farm and Alchip Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dawushan Farm Tech and Alchip Technologies, you can compare the effects of market volatilities on Dawushan Farm and Alchip 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 Dawushan Farm with a short position of Alchip Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawushan Farm and Alchip Technologies.
Diversification Opportunities for Dawushan Farm and Alchip Technologies
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dawushan and Alchip is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dawushan Farm Tech and Alchip Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchip Technologies and Dawushan Farm 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 Dawushan Farm Tech are associated (or correlated) with Alchip Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchip Technologies has no effect on the direction of Dawushan Farm i.e., Dawushan Farm and Alchip Technologies go up and down completely randomly.
Pair Corralation between Dawushan Farm and Alchip Technologies
Assuming the 90 days trading horizon Dawushan Farm Tech is expected to generate 0.78 times more return on investment than Alchip Technologies. However, Dawushan Farm Tech is 1.29 times less risky than Alchip Technologies. It trades about 0.13 of its potential returns per unit of risk. Alchip Technologies is currently generating about 0.07 per unit of risk. If you would invest 4,780 in Dawushan Farm Tech on September 4, 2024 and sell it today you would earn a total of 300.00 from holding Dawushan Farm Tech or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawushan Farm Tech vs. Alchip Technologies
Performance |
| Timeline |
| Dawushan Farm Tech |
| Alchip Technologies |
Dawushan Farm and Alchip Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawushan Farm and Alchip Technologies
The main advantage of trading using opposite Dawushan Farm and Alchip Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawushan Farm position performs unexpectedly, Alchip 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 Alchip Technologies will offset losses from the drop in Alchip Technologies' long position.| Dawushan Farm vs. Taiwan Semiconductor Manufacturing | Dawushan Farm vs. Hon Hai Precision | Dawushan Farm vs. MediaTek | Dawushan Farm vs. Chunghwa Telecom Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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