Correlation Between ChipMOS Technologies and Rexon Industrial

Can any of the company-specific risk be diversified away by investing in both ChipMOS Technologies and Rexon Industrial 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 ChipMOS Technologies and Rexon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ChipMOS Technologies and Rexon Industrial

0.84

Correlation Coefficient

ChipMOS Technologies  Rexon Industrial

Very poor diversification

The 3 months correlation between ChipMOS and Rexon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ChipMOS Technologies and Rexon Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rexon Industrial Corp and ChipMOS Technologies 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 ChipMOS Technologies are associated (or correlated) with Rexon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rexon Industrial Corp has no effect on the direction of ChipMOS Technologies i.e., ChipMOS Technologies and Rexon Industrial go up and down completely randomly.

Pair Corralation between ChipMOS Technologies and Rexon Industrial

Assuming the 90 days trading horizon ChipMOS Technologies is expected to under-perform the Rexon Industrial. But the stock apears to be less risky and, when comparing its historical volatility, ChipMOS Technologies is 1.14 times less risky than Rexon Industrial. The stock trades about -0.11 of its potential returns per unit of risk. The Rexon Industrial Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,440  in Rexon Industrial Corp on October 26, 2024 and sell it today you would lose (310.00) from holding Rexon Industrial Corp or give up 9.01% of portfolio value over 90 days.

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

ChipMOS Technologies  vs.  Rexon Industrial Corp

ChipMOS Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChipMOS Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Rexon Industrial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rexon Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with ChipMOS Technologies and Rexon Industrial

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

The idea behind ChipMOS Technologies and Rexon Industrial Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.