Correlation Between Hiwin Technologies and Taiwan Chelic

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

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

Diversification Opportunities for Hiwin Technologies and Taiwan Chelic

0.38

Correlation Coefficient

Hiwin Technologies  Taiwan Chelic

Weak diversification

The 3 months correlation between Hiwin and Taiwan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hiwin Technologies Corp and Taiwan Chelic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Chelic Corp and Hiwin Technologies 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 Hiwin Technologies Corp are associated (or correlated) with Taiwan Chelic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Chelic Corp has no effect on the direction of Hiwin Technologies i.e., Hiwin Technologies and Taiwan Chelic go up and down completely randomly.

Pair Corralation between Hiwin Technologies and Taiwan Chelic

Assuming the 90 days trading horizon Hiwin Technologies Corp is expected to generate 0.95 times more return on investment than Taiwan Chelic. However, Hiwin Technologies Corp is 1.05 times less risky than Taiwan Chelic. It trades about 0.05 of its potential returns per unit of risk. Taiwan Chelic Corp is currently generating about 0.0 per unit of risk. If you would invest  19,350  in Hiwin Technologies Corp on October 5, 2024 and sell it today you would earn a total of  11,500  from holding Hiwin Technologies Corp or generate 59.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Hiwin Technologies Corp  vs.  Taiwan Chelic Corp

Hiwin Technologies Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Technologies Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Taiwan Chelic Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Chelic Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taiwan Chelic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hiwin Technologies and Taiwan Chelic

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

The idea behind Hiwin Technologies Corp and Taiwan Chelic Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.