Correlation Between Taiwan Weighted and Ichia Technologies
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Ichia 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 Weighted and Ichia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Ichia Technologies, you can compare the effects of market volatilities on Taiwan Weighted and Ichia 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 Weighted with a short position of Ichia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Ichia Technologies.
Diversification Opportunities for Taiwan Weighted and Ichia Technologies
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Ichia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Ichia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichia Technologies and Taiwan Weighted 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 Weighted are associated (or correlated) with Ichia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichia Technologies has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Ichia Technologies go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Ichia Technologies
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 2.02 times less return on investment than Ichia Technologies. But when comparing it to its historical volatility, Taiwan Weighted is 2.46 times less risky than Ichia Technologies. It trades about 0.09 of its potential returns per unit of risk. Ichia Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,910 in Ichia Technologies on August 28, 2024 and sell it today you would earn a total of 2,395 from holding Ichia Technologies or generate 125.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Taiwan Weighted vs. Ichia Technologies
Performance |
| Timeline |
Taiwan Weighted and Ichia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Ichia Technologies
Pair trading matchups for Ichia Technologies
Pair Trading with Taiwan Weighted and Ichia Technologies
The main advantage of trading using opposite Taiwan Weighted and Ichia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Ichia 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 Ichia Technologies will offset losses from the drop in Ichia Technologies' long position.| Taiwan Weighted vs. Taichung Commercial Bank | Taiwan Weighted vs. China Times Publishing | Taiwan Weighted vs. First Insurance Co | Taiwan Weighted vs. Mega Financial Holding |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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