Correlation Between Transpacific Broadband and Integrated Micro

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

By analyzing existing cross correlation between Transpacific Broadband Group and Integrated Micro Electronics, you can compare the effects of market volatilities on Transpacific Broadband and Integrated 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 Transpacific Broadband with a short position of Integrated Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transpacific Broadband and Integrated Micro.

Diversification Opportunities for Transpacific Broadband and Integrated Micro

-0.18

Correlation Coefficient

Transpacific Broadband  Integrated Micro

Good diversification

The 3 months correlation between Transpacific and Integrated is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Transpacific Broadband Group and Integrated Micro Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Micro Ele and Transpacific Broadband 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 Transpacific Broadband Group are associated (or correlated) with Integrated Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Micro Ele has no effect on the direction of Transpacific Broadband i.e., Transpacific Broadband and Integrated Micro go up and down completely randomly.

Pair Corralation between Transpacific Broadband and Integrated Micro

Assuming the 90 days trading horizon Transpacific Broadband Group is expected to generate 1.43 times more return on investment than Integrated Micro. However, Transpacific Broadband is 1.43 times more volatile than Integrated Micro Electronics. It trades about 0.05 of its potential returns per unit of risk. Integrated Micro Electronics is currently generating about -0.06 per unit of risk. If you would invest  13.00  in Transpacific Broadband Group on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Transpacific Broadband Group or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Transpacific Broadband Group  vs.  Integrated Micro Electronics

Transpacific Broadband

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transpacific Broadband Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Transpacific Broadband may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Integrated Micro Ele

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Micro Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Transpacific Broadband and Integrated Micro

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

The idea behind Transpacific Broadband Group and Integrated Micro Electronics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.