Correlation Between Ligitek Electronics and Taishin Financial

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Can any of the company-specific risk be diversified away by investing in both Ligitek Electronics and Taishin Financial 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 Ligitek Electronics and Taishin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ligitek Electronics Co and Taishin Financial Holding, you can compare the effects of market volatilities on Ligitek Electronics and Taishin Financial 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 Ligitek Electronics with a short position of Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligitek Electronics and Taishin Financial.

Diversification Opportunities for Ligitek Electronics and Taishin Financial

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ligitek and Taishin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding and Ligitek Electronics 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 Ligitek Electronics Co are associated (or correlated) with Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and Taishin Financial go up and down completely randomly.

Pair Corralation between Ligitek Electronics and Taishin Financial

Assuming the 90 days trading horizon Ligitek Electronics Co is expected to under-perform the Taishin Financial. In addition to that, Ligitek Electronics is 21.45 times more volatile than Taishin Financial Holding. It trades about -0.04 of its total potential returns per unit of risk. Taishin Financial Holding is currently generating about -0.11 per unit of volatility. If you would invest  5,160  in Taishin Financial Holding on October 29, 2024 and sell it today you would lose (20.00) from holding Taishin Financial Holding or give up 0.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ligitek Electronics Co  vs.  Taishin Financial Holding

 Performance 
       Timeline  
Ligitek Electronics 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ligitek Electronics Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ligitek Electronics showed solid returns over the last few months and may actually be approaching a breakup point.
Taishin Financial Holding 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Taishin Financial Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Taishin Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ligitek Electronics and Taishin Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ligitek Electronics and Taishin Financial

The main advantage of trading using opposite Ligitek Electronics and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, Taishin Financial 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 Taishin Financial will offset losses from the drop in Taishin Financial's long position.
The idea behind Ligitek Electronics Co and Taishin Financial Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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