Correlation Between Amtran Technology and Taiwan Fu
Can any of the company-specific risk be diversified away by investing in both Amtran Technology and Taiwan Fu 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 Amtran Technology and Taiwan Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amtran Technology Co and Taiwan Fu Hsing, you can compare the effects of market volatilities on Amtran Technology and Taiwan Fu 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 Amtran Technology with a short position of Taiwan Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amtran Technology and Taiwan Fu.
Diversification Opportunities for Amtran Technology and Taiwan Fu
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amtran and Taiwan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Amtran Technology Co and Taiwan Fu Hsing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fu Hsing and Amtran 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 Amtran Technology Co are associated (or correlated) with Taiwan Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fu Hsing has no effect on the direction of Amtran Technology i.e., Amtran Technology and Taiwan Fu go up and down completely randomly.
Pair Corralation between Amtran Technology and Taiwan Fu
Assuming the 90 days trading horizon Amtran Technology Co is expected to under-perform the Taiwan Fu. In addition to that, Amtran Technology is 1.6 times more volatile than Taiwan Fu Hsing. It trades about -0.19 of its total potential returns per unit of risk. Taiwan Fu Hsing is currently generating about -0.26 per unit of volatility. If you would invest 5,400 in Taiwan Fu Hsing on October 8, 2024 and sell it today you would lose (210.00) from holding Taiwan Fu Hsing or give up 3.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Amtran Technology Co vs. Taiwan Fu Hsing
Performance |
Timeline |
Amtran Technology |
Taiwan Fu Hsing |
Amtran Technology and Taiwan Fu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amtran Technology and Taiwan Fu
The main advantage of trading using opposite Amtran Technology and Taiwan Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amtran Technology position performs unexpectedly, Taiwan Fu 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 Fu will offset losses from the drop in Taiwan Fu's long position.Amtran Technology vs. Gamania Digital Entertainment | Amtran Technology vs. Far EasTone Telecommunications | Amtran Technology vs. Emerging Display Technologies | Amtran Technology vs. Quanta Computer |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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