Correlation Between Tatung System and Alcor Micro

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

By analyzing existing cross correlation between Tatung System Technologies and Alcor Micro, you can compare the effects of market volatilities on Tatung System and Alcor Micro 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 Tatung System with a short position of Alcor Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tatung System and Alcor Micro.

Diversification Opportunities for Tatung System and Alcor Micro

-0.32

Correlation Coefficient

Tatung System  Alcor Micro

Very good diversification

The 3 months correlation between Tatung and Alcor is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tatung System Technologies and Alcor Micro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcor Micro and Tatung System 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 Tatung System Technologies are associated (or correlated) with Alcor Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcor Micro has no effect on the direction of Tatung System i.e., Tatung System and Alcor Micro go up and down completely randomly.

Pair Corralation between Tatung System and Alcor Micro

Assuming the 90 days trading horizon Tatung System Technologies is expected to generate 0.99 times more return on investment than Alcor Micro. However, Tatung System Technologies is 1.01 times less risky than Alcor Micro. It trades about 0.1 of its potential returns per unit of risk. Alcor Micro is currently generating about -0.1 per unit of risk. If you would invest  7,470  in Tatung System Technologies on September 4, 2024 and sell it today you would earn a total of  1,160  from holding Tatung System Technologies or generate 15.53% return on investment over 90 days.

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

Tatung System Technologies  vs.  Alcor Micro

Tatung System Techno

Risk-Adjusted Performance

8 of 100

OK

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

Alcor Micro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcor Micro 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.

Pair Trading with Tatung System and Alcor Micro

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

The idea behind Tatung System Technologies and Alcor Micro 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.