Correlation Between Asustek Computer and Taiwan Hon
Can any of the company-specific risk be diversified away by investing in both Asustek Computer and Taiwan Hon 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 Asustek Computer and Taiwan Hon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asustek Computer and Taiwan Hon Chuan, you can compare the effects of market volatilities on Asustek Computer and Taiwan Hon 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 Asustek Computer with a short position of Taiwan Hon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asustek Computer and Taiwan Hon.
Diversification Opportunities for Asustek Computer and Taiwan Hon
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Asustek and Taiwan is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Asustek Computer and Taiwan Hon Chuan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Hon Chuan and Asustek Computer 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 Asustek Computer are associated (or correlated) with Taiwan Hon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Hon Chuan has no effect on the direction of Asustek Computer i.e., Asustek Computer and Taiwan Hon go up and down completely randomly.
Pair Corralation between Asustek Computer and Taiwan Hon
Assuming the 90 days trading horizon Asustek Computer is expected to generate 1.17 times more return on investment than Taiwan Hon. However, Asustek Computer is 1.17 times more volatile than Taiwan Hon Chuan. It trades about 0.11 of its potential returns per unit of risk. Taiwan Hon Chuan is currently generating about -0.12 per unit of risk. If you would invest 54,300 in Asustek Computer on September 13, 2024 and sell it today you would earn a total of 6,100 from holding Asustek Computer or generate 11.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asustek Computer vs. Taiwan Hon Chuan
Performance |
Timeline |
Asustek Computer |
Taiwan Hon Chuan |
Asustek Computer and Taiwan Hon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asustek Computer and Taiwan Hon
The main advantage of trading using opposite Asustek Computer and Taiwan Hon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asustek Computer position performs unexpectedly, Taiwan Hon 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 Taiwan Hon will offset losses from the drop in Taiwan Hon's long position.Asustek Computer vs. AU Optronics | Asustek Computer vs. Innolux Corp | Asustek Computer vs. Ruentex Development Co | Asustek Computer vs. WiseChip Semiconductor |
Taiwan Hon vs. China Mobile | Taiwan Hon vs. TWOWAY Communications | Taiwan Hon vs. X Legend Entertainment Co | Taiwan Hon vs. Gamania Digital Entertainment |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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