Correlation Between Ta Liang and Hiwin Technologies

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

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

Diversification Opportunities for Ta Liang and Hiwin Technologies

0.01

Correlation Coefficient

Ta Liang  Hiwin Technologies

Significant diversification

The 3 months correlation between 3167 and Hiwin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ta Liang Technology and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies Corp and Ta Liang 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 Ta Liang Technology are associated (or correlated) with Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of Ta Liang i.e., Ta Liang and Hiwin Technologies go up and down completely randomly.

Pair Corralation between Ta Liang and Hiwin Technologies

Assuming the 90 days trading horizon Ta Liang Technology is expected to under-perform the Hiwin Technologies. In addition to that, Ta Liang is 1.04 times more volatile than Hiwin Technologies Corp. It trades about -0.09 of its total potential returns per unit of risk. Hiwin Technologies Corp is currently generating about -0.03 per unit of volatility. If you would invest  30,050  in Hiwin Technologies Corp on December 22, 2024 and sell it today you would lose (2,150) from holding Hiwin Technologies Corp or give up 7.15% of portfolio value over 90 days.

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

Ta Liang Technology  vs.  Hiwin Technologies Corp

Ta Liang Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ta Liang Technology 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.

Hiwin Technologies Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hiwin Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hiwin Technologies 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 Ta Liang and Hiwin Technologies

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

The idea behind Ta Liang Technology and Hiwin Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.