Correlation Between Actron Technology and Taiwan Fu
Can any of the company-specific risk be diversified away by investing in both Actron Technology and Taiwan Fu 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 Actron Technology and Taiwan Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Actron Technology and Taiwan Fu Hsing, you can compare the effects of market volatilities on Actron Technology and Taiwan Fu 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 Actron Technology with a short position of Taiwan Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Actron Technology and Taiwan Fu.
Diversification Opportunities for Actron Technology and Taiwan Fu
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Actron and Taiwan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Actron Technology and Taiwan Fu Hsing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fu Hsing and Actron 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 Actron Technology are associated (or correlated) with Taiwan Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fu Hsing has no effect on the direction of Actron Technology i.e., Actron Technology and Taiwan Fu go up and down completely randomly.
Pair Corralation between Actron Technology and Taiwan Fu
Assuming the 90 days trading horizon Actron Technology is expected to generate 2.69 times more return on investment than Taiwan Fu. However, Actron Technology is 2.69 times more volatile than Taiwan Fu Hsing. It trades about 0.09 of its potential returns per unit of risk. Taiwan Fu Hsing is currently generating about 0.09 per unit of risk. If you would invest 15,350 in Actron Technology on October 26, 2024 and sell it today you would earn a total of 450.00 from holding Actron Technology or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Actron Technology vs. Taiwan Fu Hsing
Performance |
| Timeline |
| Actron Technology |
| Taiwan Fu Hsing |
Actron Technology and Taiwan Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Actron Technology and Taiwan Fu
The main advantage of trading using opposite Actron Technology and Taiwan Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Actron Technology position performs unexpectedly, Taiwan Fu 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 Fu will offset losses from the drop in Taiwan Fu's long position.| Actron Technology vs. Cayenne Entertainment Technology | Actron Technology vs. U Tech Media Corp | Actron Technology vs. AVerMedia Technologies | Actron Technology vs. Sunspring Metal Corp |
| Taiwan Fu vs. Taiwan Shin Kong | Taiwan Fu vs. Taiwan Secom Co | Taiwan Fu vs. Pou Chen Corp | Taiwan Fu vs. Taiwan Hon Chuan |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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