Correlation Between BenQ Materials and Elite Material
Can any of the company-specific risk be diversified away by investing in both BenQ Materials and Elite Material 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 BenQ Materials and Elite Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BenQ Materials Corp and Elite Material Co, you can compare the effects of market volatilities on BenQ Materials and Elite Material 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 BenQ Materials with a short position of Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Materials and Elite Material.
Diversification Opportunities for BenQ Materials and Elite Material
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BenQ and Elite is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of BenQ Materials i.e., BenQ Materials and Elite Material go up and down completely randomly.
Pair Corralation between BenQ Materials and Elite Material
Assuming the 90 days trading horizon BenQ Materials is expected to generate 22.73 times less return on investment than Elite Material. But when comparing it to its historical volatility, BenQ Materials Corp is 1.53 times less risky than Elite Material. It trades about 0.0 of its potential returns per unit of risk. Elite Material Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 43,450 in Elite Material Co on September 3, 2024 and sell it today you would earn a total of 6,950 from holding Elite Material Co or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BenQ Materials Corp vs. Elite Material Co
Performance |
| Timeline |
| BenQ Materials Corp |
| Elite Material |
BenQ Materials and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BenQ Materials and Elite Material
The main advantage of trading using opposite BenQ Materials and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BenQ Materials position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.| BenQ Materials vs. Taiwan Semiconductor Manufacturing | BenQ Materials vs. Yang Ming Marine | BenQ Materials vs. ASE Industrial Holding | BenQ Materials vs. AU Optronics |
| Elite Material vs. Taiwan Semiconductor Manufacturing | Elite Material vs. Yang Ming Marine | Elite Material vs. ASE Industrial Holding | Elite Material vs. AU Optronics |
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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