Correlation Between Taiwan Semiconductor and Himax Technologies
Can any of the company-specific risk be diversified away by investing in both Taiwan Semiconductor and Himax Technologies 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 Semiconductor and Himax Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Semiconductor Manufacturing and Himax Technologies, you can compare the effects of market volatilities on Taiwan Semiconductor and Himax Technologies 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 Semiconductor with a short position of Himax Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Semiconductor and Himax Technologies.
Diversification Opportunities for Taiwan Semiconductor and Himax Technologies
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Himax is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and Himax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Himax Technologies and Taiwan Semiconductor 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 Semiconductor Manufacturing are associated (or correlated) with Himax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Himax Technologies has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and Himax Technologies go up and down completely randomly.
Pair Corralation between Taiwan Semiconductor and Himax Technologies
Considering the 90-day investment horizon Taiwan Semiconductor is expected to generate 4.73 times less return on investment than Himax Technologies. But when comparing it to its historical volatility, Taiwan Semiconductor Manufacturing is 1.97 times less risky than Himax Technologies. It trades about 0.06 of its potential returns per unit of risk. Himax Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 802.00 in Himax Technologies on October 23, 2024 and sell it today you would earn a total of 83.00 from holding Himax Technologies or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Semiconductor Manufactu vs. Himax Technologies
Performance |
| Timeline |
| Taiwan Semiconductor |
| Himax Technologies |
Taiwan Semiconductor and Himax Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Semiconductor and Himax Technologies
The main advantage of trading using opposite Taiwan Semiconductor and Himax Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Semiconductor position performs unexpectedly, Himax Technologies 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 Himax Technologies will offset losses from the drop in Himax Technologies' long position.| Taiwan Semiconductor vs. NVIDIA | Taiwan Semiconductor vs. Intel | Taiwan Semiconductor vs. Marvell Technology Group | Taiwan Semiconductor vs. Micron Technology |
| Himax Technologies vs. ASE Industrial Holding | Himax Technologies vs. United Microelectronics | Himax Technologies vs. MaxLinear | Himax Technologies vs. SemiLEDS |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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