Correlation Between Allied Circuit and Taichung Commercial
Can any of the company-specific risk be diversified away by investing in both Allied Circuit and Taichung Commercial 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 Allied Circuit and Taichung Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Circuit Co and Taichung Commercial Bank, you can compare the effects of market volatilities on Allied Circuit and Taichung Commercial 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 Allied Circuit with a short position of Taichung Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Circuit and Taichung Commercial.
Diversification Opportunities for Allied Circuit and Taichung Commercial
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Allied and Taichung is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Allied Circuit Co and Taichung Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taichung Commercial Bank and Allied Circuit 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 Allied Circuit Co are associated (or correlated) with Taichung Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taichung Commercial Bank has no effect on the direction of Allied Circuit i.e., Allied Circuit and Taichung Commercial go up and down completely randomly.
Pair Corralation between Allied Circuit and Taichung Commercial
Assuming the 90 days trading horizon Allied Circuit is expected to generate 1.42 times less return on investment than Taichung Commercial. In addition to that, Allied Circuit is 2.93 times more volatile than Taichung Commercial Bank. It trades about 0.02 of its total potential returns per unit of risk. Taichung Commercial Bank is currently generating about 0.08 per unit of volatility. If you would invest 1,305 in Taichung Commercial Bank on September 3, 2024 and sell it today you would earn a total of 570.00 from holding Taichung Commercial Bank or generate 43.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Circuit Co vs. Taichung Commercial Bank
Performance |
| Timeline |
| Allied Circuit |
| Taichung Commercial Bank |
Allied Circuit and Taichung Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Circuit and Taichung Commercial
The main advantage of trading using opposite Allied Circuit and Taichung Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Circuit position performs unexpectedly, Taichung Commercial 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 Taichung Commercial will offset losses from the drop in Taichung Commercial's long position.| Allied Circuit vs. Taichung Commercial Bank | Allied Circuit vs. Pontex Polyblend CoLtd | Allied Circuit vs. AVerMedia Technologies | Allied Circuit vs. Cathay Financial Holding |
| Taichung Commercial vs. Central Reinsurance Corp | Taichung Commercial vs. Huaku Development Co | Taichung Commercial vs. Chailease Holding Co | Taichung Commercial vs. CTBC Financial Holding |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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