Correlation Between Tatung System and Acer E

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

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

Diversification Opportunities for Tatung System and Acer E

0.81

Correlation Coefficient

Tatung System  Acer E

Very poor diversification

The 3 months correlation between Tatung and Acer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tatung System Technologies and Acer E Enabling Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer E Enabling and Tatung System 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 Tatung System Technologies are associated (or correlated) with Acer E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer E Enabling has no effect on the direction of Tatung System i.e., Tatung System and Acer E go up and down completely randomly.

Pair Corralation between Tatung System and Acer E

Assuming the 90 days trading horizon Tatung System Technologies is expected to under-perform the Acer E. But the stock apears to be less risky and, when comparing its historical volatility, Tatung System Technologies is 1.06 times less risky than Acer E. The stock trades about -0.15 of its potential returns per unit of risk. The Acer E Enabling Service is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  28,250  in Acer E Enabling Service on December 30, 2024 and sell it today you would lose (3,500) from holding Acer E Enabling Service or give up 12.39% of portfolio value over 90 days.

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

Tatung System Technologies  vs.  Acer E Enabling Service

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.

Acer E Enabling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acer E Enabling Service 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 Tatung System and Acer E

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

The idea behind Tatung System Technologies and Acer E Enabling Service 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.