Correlation Between Great Taipei and WiseChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Great Taipei and WiseChip Semiconductor 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 Great Taipei and WiseChip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Taipei Gas and WiseChip Semiconductor, you can compare the effects of market volatilities on Great Taipei and WiseChip Semiconductor 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 Great Taipei with a short position of WiseChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Taipei and WiseChip Semiconductor.
Diversification Opportunities for Great Taipei and WiseChip Semiconductor
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Great and WiseChip is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Great Taipei Gas and WiseChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseChip Semiconductor and Great Taipei 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 Great Taipei Gas are associated (or correlated) with WiseChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseChip Semiconductor has no effect on the direction of Great Taipei i.e., Great Taipei and WiseChip Semiconductor go up and down completely randomly.
Pair Corralation between Great Taipei and WiseChip Semiconductor
Assuming the 90 days trading horizon Great Taipei Gas is not expected to generate positive returns. However, Great Taipei Gas is 5.13 times less risky than WiseChip Semiconductor. It waists most of its returns potential to compensate for thr risk taken. WiseChip Semiconductor is generating about -0.04 per unit of risk. If you would invest 3,037 in Great Taipei Gas on September 4, 2024 and sell it today you would lose (12.00) from holding Great Taipei Gas or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Great Taipei Gas vs. WiseChip Semiconductor
Performance |
| Timeline |
| Great Taipei Gas |
| WiseChip Semiconductor |
Great Taipei and WiseChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Taipei and WiseChip Semiconductor
The main advantage of trading using opposite Great Taipei and WiseChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Taipei position performs unexpectedly, WiseChip Semiconductor 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 WiseChip Semiconductor will offset losses from the drop in WiseChip Semiconductor's long position.| Great Taipei vs. Taiwan Secom Co | Great Taipei vs. Taiwan Shin Kong | Great Taipei vs. Taiwan Cogeneration Corp | Great Taipei vs. Shin Shin Natural |
| WiseChip Semiconductor vs. Taiwan Semiconductor Manufacturing | WiseChip Semiconductor vs. Yang Ming Marine | WiseChip Semiconductor vs. ASE Industrial Holding | WiseChip Semiconductor 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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