Correlation Between Apacer Technology and Transcend Information

Can any of the company-specific risk be diversified away by investing in both Apacer Technology and Transcend Information 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 Apacer Technology and Transcend Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apacer Technology and Transcend Information, you can compare the effects of market volatilities on Apacer Technology and Transcend Information 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 Apacer Technology with a short position of Transcend Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apacer Technology and Transcend Information.

Diversification Opportunities for Apacer Technology and Transcend Information

0.88

Correlation Coefficient

Apacer Technology  Transcend Information

Very poor diversification

The 3 months correlation between Apacer and Transcend is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Apacer Technology and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information and Apacer Technology 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 Apacer Technology are associated (or correlated) with Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of Apacer Technology i.e., Apacer Technology and Transcend Information go up and down completely randomly.

Pair Corralation between Apacer Technology and Transcend Information

Assuming the 90 days trading horizon Apacer Technology is expected to generate 2.12 times less return on investment than Transcend Information. In addition to that, Apacer Technology is 1.35 times more volatile than Transcend Information. It trades about 0.02 of its total potential returns per unit of risk. Transcend Information is currently generating about 0.05 per unit of volatility. If you would invest  6,680  in Transcend Information on September 17, 2024 and sell it today you would earn a total of  2,380  from holding Transcend Information or generate 35.63% return on investment over 90 days.

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

Apacer Technology  vs.  Transcend Information

Apacer Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apacer Technology 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Transcend Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transcend Information 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 Apacer Technology and Transcend Information

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

The idea behind Apacer Technology and Transcend Information 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.