Correlation Between Taiwan Chinsan and WT Microelectronics
Can any of the company-specific risk be diversified away by investing in both Taiwan Chinsan and WT Microelectronics 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 Chinsan and WT Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Chinsan Electronic and WT Microelectronics Co, you can compare the effects of market volatilities on Taiwan Chinsan and WT Microelectronics 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 Chinsan with a short position of WT Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Chinsan and WT Microelectronics.
Diversification Opportunities for Taiwan Chinsan and WT Microelectronics
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and 3036A is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Chinsan Electronic and WT Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Microelectronics and Taiwan Chinsan 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 Chinsan Electronic are associated (or correlated) with WT Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Microelectronics has no effect on the direction of Taiwan Chinsan i.e., Taiwan Chinsan and WT Microelectronics go up and down completely randomly.
Pair Corralation between Taiwan Chinsan and WT Microelectronics
Assuming the 90 days trading horizon Taiwan Chinsan Electronic is expected to generate 41.29 times more return on investment than WT Microelectronics. However, Taiwan Chinsan is 41.29 times more volatile than WT Microelectronics Co. It trades about 0.07 of its potential returns per unit of risk. WT Microelectronics Co is currently generating about 0.46 per unit of risk. If you would invest 3,450 in Taiwan Chinsan Electronic on October 7, 2024 and sell it today you would earn a total of 330.00 from holding Taiwan Chinsan Electronic or generate 9.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Taiwan Chinsan Electronic vs. WT Microelectronics Co
Performance |
Timeline |
Taiwan Chinsan Electronic |
WT Microelectronics |
Taiwan Chinsan and WT Microelectronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Taiwan Chinsan and WT Microelectronics
The main advantage of trading using opposite Taiwan Chinsan and WT Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Chinsan position performs unexpectedly, WT Microelectronics 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 WT Microelectronics will offset losses from the drop in WT Microelectronics' long position.Taiwan Chinsan vs. Chernan Metal Industrial | Taiwan Chinsan vs. Taishin Financial Holding | Taiwan Chinsan vs. C Media Electronics | Taiwan Chinsan vs. Holiday Entertainment Co |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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