Correlation Between Taiwan Weighted and Advanced Power
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted and Advanced Power 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 Advanced Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Advanced Power Electronics, you can compare the effects of market volatilities on Taiwan Weighted and Advanced Power 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 Advanced Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Advanced Power.
Diversification Opportunities for Taiwan Weighted and Advanced Power
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Advanced is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted and Advanced Power Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Power Elect 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 Advanced Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Power Elect has no effect on the direction of Taiwan Weighted i.e., Taiwan Weighted and Advanced Power go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Advanced Power
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 0.59 times more return on investment than Advanced Power. However, Taiwan Weighted is 1.68 times less risky than Advanced Power. It trades about 0.09 of its potential returns per unit of risk. Advanced Power Electronics is currently generating about -0.01 per unit of risk. If you would invest 1,470,543 in Taiwan Weighted on August 30, 2024 and sell it today you would earn a total of 762,935 from holding Taiwan Weighted or generate 51.88% 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. Advanced Power Electronics
Performance |
| Timeline |
Taiwan Weighted and Advanced Power Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Advanced Power Electronics
Pair trading matchups for Advanced Power
Pair Trading with Taiwan Weighted and Advanced Power
The main advantage of trading using opposite Taiwan Weighted and Advanced Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted position performs unexpectedly, Advanced Power 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 Advanced Power will offset losses from the drop in Advanced Power's long position.| Taiwan Weighted vs. V Tac Technology Co | Taiwan Weighted vs. Sesoda Corp | Taiwan Weighted vs. Asmedia Technology | Taiwan Weighted vs. Oceanic Beverages Co |
| Advanced Power vs. Pan Jit International | Advanced Power vs. Global Mixed Mode Technology | Advanced Power vs. Sitronix Technology Corp | Advanced Power vs. Nuvoton Technology 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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