Correlation Between Taiwan Fu and Vivotek

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

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

Diversification Opportunities for Taiwan Fu and Vivotek

0.2

Correlation Coefficient

Taiwan Fu  Vivotek

Modest diversification

The 3 months correlation between Taiwan and Vivotek is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Fu Hsing and Vivotek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivotek and Taiwan Fu 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 Fu Hsing are associated (or correlated) with Vivotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivotek has no effect on the direction of Taiwan Fu i.e., Taiwan Fu and Vivotek go up and down completely randomly.

Pair Corralation between Taiwan Fu and Vivotek

Assuming the 90 days trading horizon Taiwan Fu Hsing is expected to under-perform the Vivotek. In addition to that, Taiwan Fu is 1.05 times more volatile than Vivotek. It trades about -0.05 of its total potential returns per unit of risk. Vivotek is currently generating about -0.04 per unit of volatility. If you would invest  12,500  in Vivotek on September 30, 2024 and sell it today you would lose (750.00) from holding Vivotek or give up 6.0% of portfolio value over 90 days.

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

Taiwan Fu Hsing  vs.  Vivotek

Taiwan Fu Hsing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Fu Hsing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Vivotek

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Taiwan Fu and Vivotek

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

The idea behind Taiwan Fu Hsing and Vivotek 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.