Correlation Between Alcor Micro and Tatung System

Can any of the company-specific risk be diversified away by investing in both Alcor Micro and Tatung System 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 Alcor Micro and Tatung System into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alcor Micro and Tatung System Technologies, you can compare the effects of market volatilities on Alcor Micro and Tatung System 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 Alcor Micro with a short position of Tatung System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcor Micro and Tatung System.

Diversification Opportunities for Alcor Micro and Tatung System

0.85

Correlation Coefficient

Alcor Micro  Tatung System

Very poor diversification

The 3 months correlation between Alcor and Tatung is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alcor Micro and Tatung System Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatung System Techno and Alcor Micro 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 Alcor Micro are associated (or correlated) with Tatung System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatung System Techno has no effect on the direction of Alcor Micro i.e., Alcor Micro and Tatung System go up and down completely randomly.

Pair Corralation between Alcor Micro and Tatung System

Assuming the 90 days trading horizon Alcor Micro is expected to under-perform the Tatung System. In addition to that, Alcor Micro is 1.65 times more volatile than Tatung System Technologies. It trades about -0.27 of its total potential returns per unit of risk. Tatung System Technologies is currently generating about -0.15 per unit of volatility. If you would invest  8,160  in Tatung System Technologies on December 30, 2024 and sell it today you would lose (1,200) from holding Tatung System Technologies or give up 14.71% of portfolio value over 90 days.

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

Alcor Micro  vs.  Tatung System Technologies

Alcor Micro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alcor Micro 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.

Tatung System Techno

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tatung System Technologies 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 Alcor Micro and Tatung System

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

The idea behind Alcor Micro and Tatung System Technologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.