Correlation Between ChipMOS Technologies and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both ChipMOS Technologies and MACOM Technology 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 ChipMOS Technologies and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChipMOS Technologies and MACOM Technology Solutions, you can compare the effects of market volatilities on ChipMOS Technologies and MACOM Technology 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 ChipMOS Technologies with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChipMOS Technologies and MACOM Technology.
Diversification Opportunities for ChipMOS Technologies and MACOM Technology
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ChipMOS and MACOM is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ChipMOS Technologies and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and ChipMOS Technologies 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 ChipMOS Technologies are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of ChipMOS Technologies i.e., ChipMOS Technologies and MACOM Technology go up and down completely randomly.
Pair Corralation between ChipMOS Technologies and MACOM Technology
Given the investment horizon of 90 days ChipMOS Technologies is expected to under-perform the MACOM Technology. But the stock apears to be less risky and, when comparing its historical volatility, ChipMOS Technologies is 2.1 times less risky than MACOM Technology. The stock trades about -0.35 of its potential returns per unit of risk. The MACOM Technology Solutions is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 11,557 in MACOM Technology Solutions on August 24, 2024 and sell it today you would earn a total of 1,799 from holding MACOM Technology Solutions or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChipMOS Technologies vs. MACOM Technology Solutions
Performance |
| Timeline |
| ChipMOS Technologies |
| MACOM Technology Sol |
ChipMOS Technologies and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChipMOS Technologies and MACOM Technology
The main advantage of trading using opposite ChipMOS Technologies and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChipMOS Technologies position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| ChipMOS Technologies vs. Eshallgo Class A | ChipMOS Technologies vs. Amtech Systems | ChipMOS Technologies vs. Gold Fields Ltd | ChipMOS Technologies vs. Aegean Airlines SA |
| MACOM Technology vs. Eshallgo Class A | MACOM Technology vs. Amtech Systems | MACOM Technology vs. Gold Fields Ltd | MACOM Technology vs. Aegean Airlines SA |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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