Correlation Between Analog Integrations and ABC Taiwan

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

By analyzing existing cross correlation between Analog Integrations and ABC Taiwan Electronics, you can compare the effects of market volatilities on Analog Integrations 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 Analog Integrations with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Integrations and ABC Taiwan.

Diversification Opportunities for Analog Integrations and ABC Taiwan

-0.78

Correlation Coefficient

Analog Integrations  ABC Taiwan

Pay attention - limited upside

The 3 months correlation between Analog and ABC is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Analog Integrations 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 Analog Integrations 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 Analog Integrations 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 Analog Integrations i.e., Analog Integrations and ABC Taiwan go up and down completely randomly.

Pair Corralation between Analog Integrations and ABC Taiwan

Assuming the 90 days trading horizon Analog Integrations is expected to under-perform the ABC Taiwan. In addition to that, Analog Integrations is 1.79 times more volatile than ABC Taiwan Electronics. It trades about -0.1 of its total potential returns per unit of risk. ABC Taiwan Electronics is currently generating about -0.02 per unit of volatility. If you would invest  2,230  in ABC Taiwan Electronics on September 15, 2024 and sell it today you would lose (125.00) from holding ABC Taiwan Electronics or give up 5.61% of portfolio value over 90 days.

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

Analog Integrations  vs.  ABC Taiwan Electronics

Analog Integrations

Risk-Adjusted Performance

0 of 100

Very Weak

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

ABC Taiwan Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ABC Taiwan Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ABC Taiwan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Analog Integrations and ABC Taiwan

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

The idea behind Analog Integrations and ABC Taiwan Electronics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.