Correlation Between Posiflex Technology and STARLUX Airlines
Can any of the company-specific risk be diversified away by investing in both Posiflex Technology and STARLUX Airlines 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 Posiflex Technology and STARLUX Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posiflex Technology and STARLUX Airlines Co, you can compare the effects of market volatilities on Posiflex Technology and STARLUX Airlines 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 Posiflex Technology with a short position of STARLUX Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posiflex Technology and STARLUX Airlines.
Diversification Opportunities for Posiflex Technology and STARLUX Airlines
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Posiflex and STARLUX is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Posiflex Technology and STARLUX Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STARLUX Airlines and Posiflex Technology 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 Posiflex Technology are associated (or correlated) with STARLUX Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STARLUX Airlines has no effect on the direction of Posiflex Technology i.e., Posiflex Technology and STARLUX Airlines go up and down completely randomly.
Pair Corralation between Posiflex Technology and STARLUX Airlines
Assuming the 90 days trading horizon Posiflex Technology is expected to generate 3.38 times more return on investment than STARLUX Airlines. However, Posiflex Technology is 3.38 times more volatile than STARLUX Airlines Co. It trades about 0.5 of its potential returns per unit of risk. STARLUX Airlines Co is currently generating about -0.2 per unit of risk. If you would invest 20,950 in Posiflex Technology on September 1, 2024 and sell it today you would earn a total of 10,100 from holding Posiflex Technology or generate 48.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posiflex Technology vs. STARLUX Airlines Co
Performance |
| Timeline |
| Posiflex Technology |
| STARLUX Airlines |
Posiflex Technology and STARLUX Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posiflex Technology and STARLUX Airlines
The main advantage of trading using opposite Posiflex Technology and STARLUX Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posiflex Technology position performs unexpectedly, STARLUX Airlines 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 STARLUX Airlines will offset losses from the drop in STARLUX Airlines' long position.The idea behind Posiflex Technology and STARLUX Airlines Co 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.| STARLUX Airlines vs. Taiwan Semiconductor Manufacturing | STARLUX Airlines vs. Hon Hai Precision | STARLUX Airlines vs. MediaTek | STARLUX Airlines 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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