Correlation Between Accton Technology and Taiwan High

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

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

Diversification Opportunities for Accton Technology and Taiwan High

0.24

Correlation Coefficient

Accton Technology  Taiwan High

Modest diversification

The 3 months correlation between Accton and Taiwan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Accton Technology Corp and Taiwan High Speed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan High Speed and Accton Technology 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 Accton Technology Corp are associated (or correlated) with Taiwan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan High Speed has no effect on the direction of Accton Technology i.e., Accton Technology and Taiwan High go up and down completely randomly.

Pair Corralation between Accton Technology and Taiwan High

Assuming the 90 days trading horizon Accton Technology Corp is expected to under-perform the Taiwan High. In addition to that, Accton Technology is 2.95 times more volatile than Taiwan High Speed. It trades about -0.13 of its total potential returns per unit of risk. Taiwan High Speed is currently generating about -0.04 per unit of volatility. If you would invest  2,790  in Taiwan High Speed on December 30, 2024 and sell it today you would lose (70.00) from holding Taiwan High Speed or give up 2.51% of portfolio value over 90 days.

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

Accton Technology Corp  vs.  Taiwan High Speed

Accton Technology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accton Technology Corp 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Taiwan High Speed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taiwan High Speed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan High 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 Accton Technology and Taiwan High

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

The idea behind Accton Technology Corp and Taiwan High Speed 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.