Correlation Between Taiwan Weighted and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Leader Electronics 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 Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Leader Electronics, you can compare the effects of market volatilities on Taiwan Weighted and Leader Electronics 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 Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Leader Electronics.
Diversification Opportunities for Taiwan Weighted and Leader Electronics
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Leader is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics 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 Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Leader Electronics go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Leader Electronics
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 1.61 times less return on investment than Leader Electronics. But when comparing it to its historical volatility, Taiwan Weighted is 2.8 times less risky than Leader Electronics. It trades about 0.09 of its potential returns per unit of risk. Leader Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,025 in Leader Electronics on August 30, 2024 and sell it today you would earn a total of 675.00 from holding Leader Electronics or generate 65.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Taiwan Weighted vs. Leader Electronics
Performance |
| Timeline |
Taiwan Weighted and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Leader Electronics
Pair trading matchups for Leader Electronics
Pair Trading with Taiwan Weighted and Leader Electronics
The main advantage of trading using opposite Taiwan Weighted and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Leader Electronics 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 Leader Electronics will offset losses from the drop in Leader Electronics' long position.| Taiwan Weighted vs. Energenesis Biomedical Co | Taiwan Weighted vs. Jia Jie Biomedical | Taiwan Weighted vs. Level Biotechnology | Taiwan Weighted vs. Medigen Biotechnology |
| Leader Electronics vs. Yulon Motor Co | Leader Electronics vs. Far Eastern Department | Leader Electronics vs. China Steel Corp | Leader Electronics vs. Chang Hwa Commercial |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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