Correlation Between Holiday Entertainment and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Holiday Entertainment 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 Holiday Entertainment and Lien Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holiday Entertainment Co and Lien Chang Electronic, you can compare the effects of market volatilities on Holiday Entertainment 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 Holiday Entertainment with a short position of Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holiday Entertainment and Lien Chang.
Diversification Opportunities for Holiday Entertainment and Lien Chang
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Holiday and Lien is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Holiday Entertainment Co 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 Holiday Entertainment 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 Holiday Entertainment Co 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 Holiday Entertainment i.e., Holiday Entertainment and Lien Chang go up and down completely randomly.
Pair Corralation between Holiday Entertainment and Lien Chang
Assuming the 90 days trading horizon Holiday Entertainment Co is expected to under-perform the Lien Chang. But the stock apears to be less risky and, when comparing its historical volatility, Holiday Entertainment Co is 3.33 times less risky than Lien Chang. The stock trades about -0.07 of its potential returns per unit of risk. The 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holiday Entertainment Co vs. Lien Chang Electronic
Performance |
| Timeline |
| Holiday Entertainment |
| Lien Chang Electronic |
Holiday Entertainment and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holiday Entertainment and Lien Chang
The main advantage of trading using opposite Holiday Entertainment and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holiday Entertainment 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.| Holiday Entertainment vs. Yulon Finance Corp | Holiday Entertainment vs. Taiwan Secom Co | Holiday Entertainment vs. Taiwan Shin Kong | Holiday Entertainment vs. Formosa International Hotels |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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