Correlation Between AAEON Technology and Taiwan Taffeta

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

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

Diversification Opportunities for AAEON Technology and Taiwan Taffeta

0.0

Correlation Coefficient

AAEON Technology  Taiwan Taffeta

Pay attention - limited upside

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

Pair Corralation between AAEON Technology and Taiwan Taffeta

If you would invest  1,490  in Taiwan Taffeta Fabric on December 27, 2024 and sell it today you would earn a total of  245.00  from holding Taiwan Taffeta Fabric or generate 16.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.79%
Values	Daily Returns

AAEON Technology  vs.  Taiwan Taffeta Fabric

AAEON Technology

Risk-Adjusted Performance

Very Weak

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

Taiwan Taffeta Fabric

Risk-Adjusted Performance

Good

Over the last 90 days Taiwan Taffeta Fabric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Taiwan Taffeta showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAEON Technology and Taiwan Taffeta

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

The idea behind AAEON Technology and Taiwan Taffeta Fabric 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.