Correlation Between Trk Corp and ChipMOS Technologies

Can any of the company-specific risk be diversified away by investing in both Trk Corp and ChipMOS Technologies 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 Trk Corp and ChipMOS Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trk Corp and ChipMOS Technologies, you can compare the effects of market volatilities on Trk Corp and ChipMOS Technologies 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 Trk Corp with a short position of ChipMOS Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trk Corp and ChipMOS Technologies.

Diversification Opportunities for Trk Corp and ChipMOS Technologies

-0.63

Correlation Coefficient

Trk Corp  ChipMOS Technologies

Excellent diversification

The 3 months correlation between Trk and ChipMOS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Trk Corp and ChipMOS Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipMOS Technologies and Trk Corp 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 Trk Corp are associated (or correlated) with ChipMOS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipMOS Technologies has no effect on the direction of Trk Corp i.e., Trk Corp and ChipMOS Technologies go up and down completely randomly.

Pair Corralation between Trk Corp and ChipMOS Technologies

Assuming the 90 days trading horizon Trk Corp is expected to generate 1.5 times more return on investment than ChipMOS Technologies. However, Trk Corp is 1.5 times more volatile than ChipMOS Technologies. It trades about 0.04 of its potential returns per unit of risk. ChipMOS Technologies is currently generating about -0.01 per unit of risk. If you would invest  1,510  in Trk Corp on October 26, 2024 and sell it today you would earn a total of  590.00  from holding Trk Corp or generate 39.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Trk Corp  vs.  ChipMOS Technologies

Trk Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trk Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Trk Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ChipMOS Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChipMOS Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Trk Corp and ChipMOS Technologies

The main advantage of trading using opposite Trk Corp and ChipMOS Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trk Corp position performs unexpectedly, ChipMOS Technologies 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 ChipMOS Technologies will offset losses from the drop in ChipMOS Technologies' long position.

The idea behind Trk Corp and ChipMOS Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.