Correlation Between Creative Sensor and Information Technology
Can any of the company-specific risk be diversified away by investing in both Creative Sensor and Information Technology 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 Creative Sensor and Information Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Creative Sensor and Information Technology Total, you can compare the effects of market volatilities on Creative Sensor and Information Technology 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 Creative Sensor with a short position of Information Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creative Sensor and Information Technology.
Diversification Opportunities for Creative Sensor and Information Technology
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Creative and Information is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Creative Sensor and Information Technology Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Technology and Creative Sensor 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 Creative Sensor are associated (or correlated) with Information Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Technology has no effect on the direction of Creative Sensor i.e., Creative Sensor and Information Technology go up and down completely randomly.
Pair Corralation between Creative Sensor and Information Technology
Assuming the 90 days trading horizon Creative Sensor is expected to generate 1.49 times more return on investment than Information Technology. However, Creative Sensor is 1.49 times more volatile than Information Technology Total. It trades about 0.09 of its potential returns per unit of risk. Information Technology Total is currently generating about 0.01 per unit of risk. If you would invest 2,900 in Creative Sensor on September 15, 2024 and sell it today you would earn a total of 2,350 from holding Creative Sensor or generate 81.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Creative Sensor vs. Information Technology Total
Performance |
| Timeline |
| Creative Sensor |
| Information Technology |
Creative Sensor and Information Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Creative Sensor and Information Technology
The main advantage of trading using opposite Creative Sensor and Information Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creative Sensor position performs unexpectedly, Information Technology 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 Information Technology will offset losses from the drop in Information Technology's long position.| Creative Sensor vs. AU Optronics | Creative Sensor vs. Innolux Corp | Creative Sensor vs. Ruentex Development Co | Creative Sensor vs. WiseChip Semiconductor |
| Information Technology vs. Wistron Information Technology | Information Technology vs. Syscom Computer Engineering | Information Technology vs. Tatung System Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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