Correlation Between Taiwan Chinsan and ANJI Technology

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

Diversification Opportunities for Taiwan Chinsan and ANJI Technology

-0.26

Correlation Coefficient

Taiwan Chinsan  ANJI Technology

Very good diversification

The 3 months correlation between Taiwan and ANJI is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Chinsan Electronic and ANJI Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANJI Technology 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 ANJI Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANJI Technology has no effect on the direction of Taiwan Chinsan i.e., Taiwan Chinsan and ANJI Technology go up and down completely randomly.

Pair Corralation between Taiwan Chinsan and ANJI Technology

Assuming the 90 days trading horizon Taiwan Chinsan Electronic is expected to under-perform the ANJI Technology. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Chinsan Electronic is 1.14 times less risky than ANJI Technology. The stock trades about -0.02 of its potential returns per unit of risk. The ANJI Technology Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,825  in ANJI Technology Co on December 29, 2024 and sell it today you would earn a total of  625.00  from holding ANJI Technology Co or generate 22.12% return on investment over 90 days.

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

Taiwan Chinsan Electronic  vs.  ANJI Technology Co

Taiwan Chinsan Electronic

Risk-Adjusted Performance

Very Weak

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

ANJI Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANJI Technology Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ANJI Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taiwan Chinsan and ANJI Technology

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

The idea behind Taiwan Chinsan Electronic and ANJI Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.