Correlation Between Taiwan Weighted and Aspeed Technology
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Aspeed Technology 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 Aspeed Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Aspeed Technology, you can compare the effects of market volatilities on Taiwan Weighted and Aspeed Technology 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 Aspeed Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Aspeed Technology.
Diversification Opportunities for Taiwan Weighted and Aspeed Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taiwan and Aspeed is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Aspeed Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspeed Technology 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 Aspeed Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspeed Technology has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Aspeed Technology go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Aspeed Technology
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 2.34 times less return on investment than Aspeed Technology. But when comparing it to its historical volatility, Taiwan Weighted is 3.2 times less risky than Aspeed Technology. It trades about 0.09 of its potential returns per unit of risk. Aspeed Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 187,000 in Aspeed Technology on August 31, 2024 and sell it today you would earn a total of 213,500 from holding Aspeed Technology or generate 114.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.91% |
| Values | Daily Returns |
Taiwan Weighted vs. Aspeed Technology
Performance |
| Timeline |
Taiwan Weighted and Aspeed Technology Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Aspeed Technology
Pair trading matchups for Aspeed Technology
Pair Trading with Taiwan Weighted and Aspeed Technology
The main advantage of trading using opposite Taiwan Weighted and Aspeed Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Aspeed Technology 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 Aspeed Technology will offset losses from the drop in Aspeed Technology's long position.| Taiwan Weighted vs. Level Biotechnology | Taiwan Weighted vs. Hsin Kuang Steel | Taiwan Weighted vs. China Steel Corp | Taiwan Weighted vs. Sunmax Biotechnology Co |
| Aspeed Technology vs. Taiwan Semiconductor Manufacturing | Aspeed Technology vs. MediaTek | Aspeed Technology vs. United Microelectronics | Aspeed Technology vs. Novatek Microelectronics Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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