Correlation Between Taiwan Surface and Emerging Display

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

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

Diversification Opportunities for Taiwan Surface and Emerging Display

-0.41

Correlation Coefficient

Taiwan Surface  Emerging Display

Very good diversification

The 3 months correlation between Taiwan and Emerging is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Surface Mounting and Emerging Display Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Display Tec and Taiwan Surface 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 Surface Mounting are associated (or correlated) with Emerging Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Display Tec has no effect on the direction of Taiwan Surface i.e., Taiwan Surface and Emerging Display go up and down completely randomly.

Pair Corralation between Taiwan Surface and Emerging Display

Assuming the 90 days trading horizon Taiwan Surface Mounting is expected to under-perform the Emerging Display. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Surface Mounting is 1.04 times less risky than Emerging Display. The stock trades about -0.01 of its potential returns per unit of risk. The Emerging Display Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,620  in Emerging Display Technologies on October 7, 2024 and sell it today you would earn a total of  140.00  from holding Emerging Display Technologies or generate 5.34% return on investment over 90 days.

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

Taiwan Surface Mounting  vs.  Emerging Display Technologies

Taiwan Surface Mounting

Risk-Adjusted Performance

0 of 100

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.

Emerging Display Tec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Display Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Emerging Display 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 Taiwan Surface and Emerging Display

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

The idea behind Taiwan Surface Mounting and Emerging Display 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.