Correlation Between Pili International and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Pili International and Lien Chang 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 Pili International and Lien Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pili International Multimedia and Lien Chang Electronic, you can compare the effects of market volatilities on Pili International and Lien Chang 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 Pili International with a short position of Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pili International and Lien Chang.
Diversification Opportunities for Pili International and Lien Chang
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pili and Lien is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pili International Multimedia and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic and Pili International 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 Pili International Multimedia are associated (or correlated) with Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Pili International i.e., Pili International and Lien Chang go up and down completely randomly.
Pair Corralation between Pili International and Lien Chang
Assuming the 90 days trading horizon Pili International is expected to generate 10.07 times less return on investment than Lien Chang. But when comparing it to its historical volatility, Pili International Multimedia is 1.52 times less risky than Lien Chang. It trades about 0.01 of its potential returns per unit of risk. Lien Chang Electronic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,130 in Lien Chang Electronic on September 2, 2024 and sell it today you would earn a total of 465.00 from holding Lien Chang Electronic or generate 41.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pili International Multimedia vs. Lien Chang Electronic
Performance |
| Timeline |
| Pili International |
| Lien Chang Electronic |
Pili International and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pili International and Lien Chang
The main advantage of trading using opposite Pili International and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pili International position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang's long position.| Pili International vs. Deltamac Taiwan Co | Pili International vs. YuantaP shares Taiwan Top | Pili International vs. YuantaP shares Taiwan Electronics | Pili International vs. Fubon MSCI Taiwan |
| Lien Chang vs. Hitron Technologies | Lien Chang vs. Universal Microelectronics Co | Lien Chang vs. Pan International Industrial Corp | Lien Chang vs. Sunonwealth Electric Machine |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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