Correlation Between Ennostar and Taiwan Surface

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

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

Diversification Opportunities for Ennostar and Taiwan Surface

-0.17

Correlation Coefficient

Ennostar  Taiwan Surface

Good diversification

The 3 months correlation between Ennostar and Taiwan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ennostar and Taiwan Surface Mounting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Surface Mounting and Ennostar 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 Ennostar are associated (or correlated) with Taiwan Surface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Surface Mounting has no effect on the direction of Ennostar i.e., Ennostar and Taiwan Surface go up and down completely randomly.

Pair Corralation between Ennostar and Taiwan Surface

Assuming the 90 days trading horizon Ennostar is expected to generate 1.73 times more return on investment than Taiwan Surface. However, Ennostar is 1.73 times more volatile than Taiwan Surface Mounting. It trades about 0.0 of its potential returns per unit of risk. Taiwan Surface Mounting is currently generating about 0.0 per unit of risk. If you would invest  4,210  in Ennostar on December 30, 2024 and sell it today you would lose (70.00) from holding Ennostar or give up 1.66% of portfolio value over 90 days.

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

Ennostar  vs.  Taiwan Surface Mounting

Ennostar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ennostar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ennostar is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taiwan Surface Mounting

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Ennostar and Taiwan Surface Mounting 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.