Correlation Between Taiwan Weighted and Leadtek Research
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Leadtek Research 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 Leadtek Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Leadtek Research, you can compare the effects of market volatilities on Taiwan Weighted and Leadtek Research 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 Leadtek Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Leadtek Research.
Diversification Opportunities for Taiwan Weighted and Leadtek Research
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Leadtek is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Leadtek Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leadtek Research 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 Leadtek Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leadtek Research has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Leadtek Research go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Leadtek Research
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.46 times more return on investment than Leadtek Research. However, Taiwan Weighted is 2.18 times less risky than Leadtek Research. It trades about 0.03 of its potential returns per unit of risk. Leadtek Research is currently generating about -0.14 per unit of risk. If you would invest 2,153,676 in Taiwan Weighted on September 1, 2024 and sell it today you would earn a total of 72,574 from holding Taiwan Weighted or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Taiwan Weighted vs. Leadtek Research
Performance |
| Timeline |
Taiwan Weighted and Leadtek Research Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Leadtek Research
Pair trading matchups for Leadtek Research
Pair Trading with Taiwan Weighted and Leadtek Research
The main advantage of trading using opposite Taiwan Weighted and Leadtek Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Leadtek Research 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 Leadtek Research will offset losses from the drop in Leadtek Research's long position.| Taiwan Weighted vs. Asustek Computer | Taiwan Weighted vs. Grand Plastic Technology | Taiwan Weighted vs. Cheng Mei Materials | Taiwan Weighted vs. Ruentex Materials Co |
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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