Correlation Between Taiwan Surface and Fittech

Can any of the company-specific risk be diversified away by investing in both Taiwan Surface and Fittech 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 Fittech 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 Fittech Co, you can compare the effects of market volatilities on Taiwan Surface and Fittech 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 Fittech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Surface and Fittech.

Diversification Opportunities for Taiwan Surface and Fittech

-0.37

Correlation Coefficient

Taiwan Surface  Fittech

Very good diversification

The 3 months correlation between Taiwan and Fittech is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Surface Mounting and Fittech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fittech 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 Fittech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fittech has no effect on the direction of Taiwan Surface i.e., Taiwan Surface and Fittech go up and down completely randomly.

Pair Corralation between Taiwan Surface and Fittech

Assuming the 90 days trading horizon Taiwan Surface Mounting is expected to generate 0.43 times more return on investment than Fittech. However, Taiwan Surface Mounting is 2.32 times less risky than Fittech. It trades about 0.0 of its potential returns per unit of risk. Fittech Co is currently generating about -0.17 per unit of risk. If you would invest  10,950  in Taiwan Surface Mounting on December 30, 2024 and sell it today you would lose (50.00) from holding Taiwan Surface Mounting or give up 0.46% of portfolio value over 90 days.

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

Taiwan Surface Mounting  vs.  Fittech Co

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.

Fittech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Taiwan Surface and Fittech

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

The idea behind Taiwan Surface Mounting and Fittech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.