Correlation Between Thinking Electronic and Amazing Microelectronic
Can any of the company-specific risk be diversified away by investing in both Thinking Electronic and Amazing Microelectronic 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 Thinking Electronic and Amazing Microelectronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thinking Electronic Industrial and Amazing Microelectronic, you can compare the effects of market volatilities on Thinking Electronic and Amazing Microelectronic 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 Thinking Electronic with a short position of Amazing Microelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thinking Electronic and Amazing Microelectronic.
Diversification Opportunities for Thinking Electronic and Amazing Microelectronic
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thinking and Amazing is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Thinking Electronic Industrial and Amazing Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazing Microelectronic and Thinking Electronic 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 Thinking Electronic Industrial are associated (or correlated) with Amazing Microelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazing Microelectronic has no effect on the direction of Thinking Electronic i.e., Thinking Electronic and Amazing Microelectronic go up and down completely randomly.
Pair Corralation between Thinking Electronic and Amazing Microelectronic
Assuming the 90 days trading horizon Thinking Electronic Industrial is expected to under-perform the Amazing Microelectronic. But the stock apears to be less risky and, when comparing its historical volatility, Thinking Electronic Industrial is 1.56 times less risky than Amazing Microelectronic. The stock trades about -0.09 of its potential returns per unit of risk. The Amazing Microelectronic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,220 in Amazing Microelectronic on September 12, 2024 and sell it today you would earn a total of 530.00 from holding Amazing Microelectronic or generate 5.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Thinking Electronic Industrial vs. Amazing Microelectronic
Performance |
Timeline |
Thinking Electronic |
Amazing Microelectronic |
Thinking Electronic and Amazing Microelectronic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thinking Electronic and Amazing Microelectronic
The main advantage of trading using opposite Thinking Electronic and Amazing Microelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thinking Electronic position performs unexpectedly, Amazing Microelectronic 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 Amazing Microelectronic will offset losses from the drop in Amazing Microelectronic's long position.Thinking Electronic vs. AU Optronics | Thinking Electronic vs. Innolux Corp | Thinking Electronic vs. Ruentex Development Co | Thinking Electronic vs. WiseChip Semiconductor |
Amazing Microelectronic vs. AU Optronics | Amazing Microelectronic vs. Innolux Corp | Amazing Microelectronic vs. Ruentex Development Co | Amazing Microelectronic vs. WiseChip Semiconductor |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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