Correlation Between Taiwan Mobile and Amtran Technology
Can any of the company-specific risk be diversified away by investing in both Taiwan Mobile and Amtran Technology 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 Mobile and Amtran Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Mobile Co and Amtran Technology Co, you can compare the effects of market volatilities on Taiwan Mobile and Amtran Technology 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 Mobile with a short position of Amtran Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Mobile and Amtran Technology.
Diversification Opportunities for Taiwan Mobile and Amtran Technology
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Taiwan and Amtran is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Mobile Co and Amtran Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amtran Technology and Taiwan Mobile 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 Mobile Co are associated (or correlated) with Amtran Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amtran Technology has no effect on the direction of Taiwan Mobile i.e., Taiwan Mobile and Amtran Technology go up and down completely randomly.
Pair Corralation between Taiwan Mobile and Amtran Technology
Assuming the 90 days trading horizon Taiwan Mobile Co is expected to generate 0.48 times more return on investment than Amtran Technology. However, Taiwan Mobile Co is 2.08 times less risky than Amtran Technology. It trades about 0.04 of its potential returns per unit of risk. Amtran Technology Co is currently generating about 0.01 per unit of risk. If you would invest 10,600 in Taiwan Mobile Co on September 24, 2024 and sell it today you would earn a total of 700.00 from holding Taiwan Mobile Co or generate 6.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Taiwan Mobile Co vs. Amtran Technology Co
Performance |
Timeline |
Taiwan Mobile |
Amtran Technology |
Taiwan Mobile and Amtran Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taiwan Mobile and Amtran Technology
The main advantage of trading using opposite Taiwan Mobile and Amtran Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Mobile position performs unexpectedly, Amtran Technology 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 Amtran Technology will offset losses from the drop in Amtran Technology's long position.Taiwan Mobile vs. China Steel Corp | Taiwan Mobile vs. Formosa Plastics Corp | Taiwan Mobile vs. Cathay Financial Holding | Taiwan Mobile vs. Fubon Financial Holding |
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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 Stocks Directory module to find actively traded stocks across global markets.
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