Correlation Between Plastron Precision and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both Plastron Precision and ABC Taiwan 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 Plastron Precision and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastron Precision Co and ABC Taiwan Electronics, you can compare the effects of market volatilities on Plastron Precision and ABC Taiwan 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 Plastron Precision with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastron Precision and ABC Taiwan.
Diversification Opportunities for Plastron Precision and ABC Taiwan
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Plastron and ABC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Plastron Precision Co and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics and Plastron Precision 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 Plastron Precision Co are associated (or correlated) with ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of Plastron Precision i.e., Plastron Precision and ABC Taiwan go up and down completely randomly.
Pair Corralation between Plastron Precision and ABC Taiwan
Assuming the 90 days trading horizon Plastron Precision Co is expected to generate 0.61 times more return on investment than ABC Taiwan. However, Plastron Precision Co is 1.65 times less risky than ABC Taiwan. It trades about 0.01 of its potential returns per unit of risk. ABC Taiwan Electronics is currently generating about -0.01 per unit of risk. If you would invest 1,510 in Plastron Precision Co on October 11, 2024 and sell it today you would earn a total of 5.00 from holding Plastron Precision Co or generate 0.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Plastron Precision Co vs. ABC Taiwan Electronics
Performance |
Timeline |
Plastron Precision |
ABC Taiwan Electronics |
Plastron Precision and ABC Taiwan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Plastron Precision and ABC Taiwan
The main advantage of trading using opposite Plastron Precision and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastron Precision position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's long position.Plastron Precision vs. ABC Taiwan Electronics | Plastron Precision vs. HOYA Resort Hotel | Plastron Precision vs. Formosa International Hotels | Plastron Precision vs. FarGlory Hotel Co |
ABC Taiwan vs. Yuan High Tech Development | ABC Taiwan vs. Everlight Chemical Industrial | ABC Taiwan vs. Chicony Power Technology | ABC Taiwan vs. Posiflex Technology |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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