Correlation Between Eurocharm Holdings and ChipMOS Technologies

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

By analyzing existing cross correlation between Eurocharm Holdings Co and ChipMOS Technologies, you can compare the effects of market volatilities on Eurocharm Holdings and ChipMOS 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 Eurocharm Holdings with a short position of ChipMOS Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurocharm Holdings and ChipMOS Technologies.

Diversification Opportunities for Eurocharm Holdings and ChipMOS Technologies

0.0

Correlation Coefficient

Eurocharm Holdings  ChipMOS Technologies

Pay attention - limited upside

The 3 months correlation between Eurocharm and ChipMOS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eurocharm Holdings Co and ChipMOS Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipMOS Technologies and Eurocharm Holdings 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 Eurocharm Holdings Co are associated (or correlated) with ChipMOS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipMOS Technologies has no effect on the direction of Eurocharm Holdings i.e., Eurocharm Holdings and ChipMOS Technologies go up and down completely randomly.

Pair Corralation between Eurocharm Holdings and ChipMOS Technologies

If you would invest (100.00) in ChipMOS Technologies on October 11, 2024 and sell it today you would earn a total of  100.00  from holding ChipMOS Technologies or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Eurocharm Holdings Co  vs.  ChipMOS Technologies

Eurocharm Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

ChipMOS Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eurocharm Holdings and ChipMOS Technologies

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

The idea behind Eurocharm Holdings Co and ChipMOS Technologies 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.