Correlation Between Taiwan Weighted and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Elan Microelectronics 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 Elan Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Elan Microelectronics Corp, you can compare the effects of market volatilities on Taiwan Weighted and Elan Microelectronics 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 Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Elan Microelectronics.
Diversification Opportunities for Taiwan Weighted and Elan Microelectronics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Elan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics 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 Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Elan Microelectronics go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Elan Microelectronics
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.4 times less return on investment than Elan Microelectronics. But when comparing it to its historical volatility, Taiwan Weighted is 1.92 times less risky than Elan Microelectronics. It trades about 0.09 of its potential returns per unit of risk. Elan Microelectronics Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,427 in Elan Microelectronics Corp on August 27, 2024 and sell it today you would earn a total of 6,373 from holding Elan Microelectronics Corp or generate 75.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.75% |
| Values | Daily Returns |
Taiwan Weighted vs. Elan Microelectronics Corp
Performance |
| Timeline |
Taiwan Weighted and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Elan Microelectronics Corp
Pair trading matchups for Elan Microelectronics
Pair Trading with Taiwan Weighted and Elan Microelectronics
The main advantage of trading using opposite Taiwan Weighted and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Elan Microelectronics 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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