Correlation Between Taiwan Secom and Cyberlink

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

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

Diversification Opportunities for Taiwan Secom and Cyberlink

-0.47

Correlation Coefficient

Taiwan Secom  Cyberlink

Very good diversification

The 3 months correlation between Taiwan and Cyberlink is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Secom Co and Cyberlink Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyberlink and Taiwan Secom 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 Secom Co are associated (or correlated) with Cyberlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyberlink has no effect on the direction of Taiwan Secom i.e., Taiwan Secom and Cyberlink go up and down completely randomly.

Pair Corralation between Taiwan Secom and Cyberlink

Assuming the 90 days trading horizon Taiwan Secom Co is expected to under-perform the Cyberlink. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Secom Co is 3.28 times less risky than Cyberlink. The stock trades about -0.02 of its potential returns per unit of risk. The Cyberlink Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  9,270  in Cyberlink Co on December 25, 2024 and sell it today you would earn a total of  2,780  from holding Cyberlink Co or generate 29.99% return on investment over 90 days.

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

Taiwan Secom Co  vs.  Cyberlink Co

Taiwan Secom

Risk-Adjusted Performance

Very Weak

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

Cyberlink

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cyberlink Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cyberlink showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taiwan Secom and Cyberlink

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

The idea behind Taiwan Secom Co and Cyberlink 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.