Correlation Between Macronix International and Biostar Microtech

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

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

Diversification Opportunities for Macronix International and Biostar Microtech

-0.09

Correlation Coefficient

Macronix International  Biostar Microtech

Good diversification

The 3 months correlation between Macronix and Biostar is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Macronix International Co and Biostar Microtech Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biostar Microtech and Macronix International 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 Macronix International Co are associated (or correlated) with Biostar Microtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biostar Microtech has no effect on the direction of Macronix International i.e., Macronix International and Biostar Microtech go up and down completely randomly.

Pair Corralation between Macronix International and Biostar Microtech

Assuming the 90 days trading horizon Macronix International Co is expected to under-perform the Biostar Microtech. But the stock apears to be less risky and, when comparing its historical volatility, Macronix International Co is 2.24 times less risky than Biostar Microtech. The stock trades about -0.22 of its potential returns per unit of risk. The Biostar Microtech International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,305  in Biostar Microtech International on September 2, 2024 and sell it today you would earn a total of  620.00  from holding Biostar Microtech International or generate 26.9% return on investment over 90 days.

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

Macronix International Co  vs.  Biostar Microtech Internationa

Macronix International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macronix International Co 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.

Biostar Microtech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biostar Microtech International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Biostar Microtech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macronix International and Biostar Microtech

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

The idea behind Macronix International Co and Biostar Microtech International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.