Correlation Between Taiwan Chinsan and Microelectronics
Can any of the company-specific risk be diversified away by investing in both Taiwan Chinsan and Microelectronics 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 Chinsan and Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Chinsan Electronic and Microelectronics Technology, you can compare the effects of market volatilities on Taiwan Chinsan and Microelectronics 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 Chinsan with a short position of Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Chinsan and Microelectronics.
Diversification Opportunities for Taiwan Chinsan and Microelectronics
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Taiwan and Microelectronics is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Chinsan Electronic and Microelectronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microelectronics Tec and Taiwan Chinsan 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 Chinsan Electronic are associated (or correlated) with Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microelectronics Tec has no effect on the direction of Taiwan Chinsan i.e., Taiwan Chinsan and Microelectronics go up and down completely randomly.
Pair Corralation between Taiwan Chinsan and Microelectronics
Assuming the 90 days trading horizon Taiwan Chinsan Electronic is expected to generate 0.88 times more return on investment than Microelectronics. However, Taiwan Chinsan Electronic is 1.13 times less risky than Microelectronics. It trades about 0.21 of its potential returns per unit of risk. Microelectronics Technology is currently generating about 0.11 per unit of risk. If you would invest 3,475 in Taiwan Chinsan Electronic on August 30, 2024 and sell it today you would earn a total of 570.00 from holding Taiwan Chinsan Electronic or generate 16.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Chinsan Electronic vs. Microelectronics Technology
Performance |
| Timeline |
| Taiwan Chinsan Electronic |
| Microelectronics Tec |
Taiwan Chinsan and Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Chinsan and Microelectronics
The main advantage of trading using opposite Taiwan Chinsan and Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Chinsan position performs unexpectedly, Microelectronics 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 Microelectronics will offset losses from the drop in Microelectronics' long position.| Taiwan Chinsan vs. Microtips Technology | Taiwan Chinsan vs. Integrated Service Technology | Taiwan Chinsan vs. Daxin Materials Corp | Taiwan Chinsan vs. Elite Material Co |
| Microelectronics vs. D Link Corp | Microelectronics vs. Accton Technology Corp | Microelectronics vs. Macronix International Co | Microelectronics vs. Ritek 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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