Correlation Between Taiwan Speciality and Amtran Technology

Can any of the company-specific risk be diversified away by investing in both Taiwan Speciality 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 Speciality 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 Speciality Chemicals and Amtran Technology Co, you can compare the effects of market volatilities on Taiwan Speciality 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 Speciality with a short position of Amtran Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Speciality and Amtran Technology.

Diversification Opportunities for Taiwan Speciality and Amtran Technology

0.42

Correlation Coefficient

Taiwan Speciality  Amtran Technology

Very weak diversification

The 3 months correlation between Taiwan and Amtran is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Speciality Chemicals 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 Speciality 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 Speciality Chemicals 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 Speciality i.e., Taiwan Speciality and Amtran Technology go up and down completely randomly.

Pair Corralation between Taiwan Speciality and Amtran Technology

Assuming the 90 days trading horizon Taiwan Speciality Chemicals is expected to generate 1.2 times more return on investment than Amtran Technology. However, Taiwan Speciality is 1.2 times more volatile than Amtran Technology Co. It trades about 0.04 of its potential returns per unit of risk. Amtran Technology Co is currently generating about -0.26 per unit of risk. If you would invest  17,300  in Taiwan Speciality Chemicals on October 8, 2024 and sell it today you would earn a total of  450.00  from holding Taiwan Speciality Chemicals or generate 2.6% return on investment over 90 days.

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

Taiwan Speciality Chemicals  vs.  Amtran Technology Co

Taiwan Speciality

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amtran Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Taiwan Speciality and Amtran Technology

The main advantage of trading using opposite Taiwan Speciality and Amtran Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Speciality 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.

The idea behind Taiwan Speciality Chemicals and Amtran Technology Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.