Correlation Between Taiwan Secom and Promate Electronic
Can any of the company-specific risk be diversified away by investing in both Taiwan Secom and Promate Electronic 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 Taiwan Secom and Promate Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Secom Co and Promate Electronic Co, you can compare the effects of market volatilities on Taiwan Secom and Promate Electronic 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 Taiwan Secom with a short position of Promate Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Secom and Promate Electronic.
Diversification Opportunities for Taiwan Secom and Promate Electronic
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Taiwan and Promate is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Secom Co and Promate Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Promate Electronic and Taiwan Secom 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 Taiwan Secom Co are associated (or correlated) with Promate Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Promate Electronic has no effect on the direction of Taiwan Secom i.e., Taiwan Secom and Promate Electronic go up and down completely randomly.
Pair Corralation between Taiwan Secom and Promate Electronic
Assuming the 90 days trading horizon Taiwan Secom is expected to generate 3.56 times less return on investment than Promate Electronic. But when comparing it to its historical volatility, Taiwan Secom Co is 1.7 times less risky than Promate Electronic. It trades about 0.04 of its potential returns per unit of risk. Promate Electronic Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,594 in Promate Electronic Co on November 5, 2024 and sell it today you would earn a total of 4,246 from holding Promate Electronic Co or generate 118.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Secom Co vs. Promate Electronic Co
Performance |
| Timeline |
| Taiwan Secom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Promate Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Taiwan Secom and Promate Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Secom and Promate Electronic
The main advantage of trading using opposite Taiwan Secom and Promate Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Secom position performs unexpectedly, Promate Electronic 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 Promate Electronic will offset losses from the drop in Promate Electronic's long position.The idea behind Taiwan Secom Co and Promate Electronic Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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