Correlation Between Taiwan Mask and Macronix International

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

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

Diversification Opportunities for Taiwan Mask and Macronix International

0.81

Correlation Coefficient

Taiwan Mask  Macronix International

Very poor diversification

The 3 months correlation between Taiwan and Macronix is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Mask Corp and Macronix International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macronix International and Taiwan Mask 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 Mask Corp are associated (or correlated) with Macronix International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macronix International has no effect on the direction of Taiwan Mask i.e., Taiwan Mask and Macronix International go up and down completely randomly.

Pair Corralation between Taiwan Mask and Macronix International

Assuming the 90 days trading horizon Taiwan Mask Corp is expected to generate 0.72 times more return on investment than Macronix International. However, Taiwan Mask Corp is 1.39 times less risky than Macronix International. It trades about -0.09 of its potential returns per unit of risk. Macronix International Co is currently generating about -0.17 per unit of risk. If you would invest  5,710  in Taiwan Mask Corp on September 16, 2024 and sell it today you would lose (550.00) from holding Taiwan Mask Corp or give up 9.63% of portfolio value over 90 days.

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

Taiwan Mask Corp  vs.  Macronix International Co

Taiwan Mask Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Mask Corp 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.

Macronix International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macronix International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Taiwan Mask and Macronix International

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

The idea behind Taiwan Mask Corp and Macronix International Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..