Correlation Between BenQ Materials and Taiwan Hon
Can any of the company-specific risk be diversified away by investing in both BenQ Materials and Taiwan Hon 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 Taiwan Hon 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 Taiwan Hon Chuan, you can compare the effects of market volatilities on BenQ Materials and Taiwan Hon 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 Taiwan Hon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BenQ Materials and Taiwan Hon.
Diversification Opportunities for BenQ Materials and Taiwan Hon
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BenQ and Taiwan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Taiwan Hon Chuan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Hon Chuan 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 Taiwan Hon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Hon Chuan has no effect on the direction of BenQ Materials i.e., BenQ Materials and Taiwan Hon go up and down completely randomly.
Pair Corralation between BenQ Materials and Taiwan Hon
Assuming the 90 days trading horizon BenQ Materials Corp is expected to generate 1.27 times more return on investment than Taiwan Hon. However, BenQ Materials is 1.27 times more volatile than Taiwan Hon Chuan. It trades about 0.02 of its potential returns per unit of risk. Taiwan Hon Chuan is currently generating about -0.14 per unit of risk. If you would invest 3,220 in BenQ Materials Corp on September 5, 2024 and sell it today you would earn a total of 20.00 from holding BenQ Materials Corp or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BenQ Materials Corp vs. Taiwan Hon Chuan
Performance |
| Timeline |
| BenQ Materials Corp |
| Taiwan Hon Chuan |
BenQ Materials and Taiwan Hon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BenQ Materials and Taiwan Hon
The main advantage of trading using opposite BenQ Materials and Taiwan Hon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BenQ Materials position performs unexpectedly, Taiwan Hon 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 Taiwan Hon will offset losses from the drop in Taiwan Hon's long position.| BenQ Materials vs. Taiwan Semiconductor Manufacturing | BenQ Materials vs. Yang Ming Marine | BenQ Materials vs. AU Optronics | BenQ Materials vs. Nan Ya Plastics |
| Taiwan Hon vs. Insyde Software | Taiwan Hon vs. FarGlory Hotel Co | Taiwan Hon vs. Cheng Mei Materials | Taiwan Hon vs. Nan Ya Plastics |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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