Correlation Between Lien Chang and Chicony Electronics
Can any of the company-specific risk be diversified away by investing in both Lien Chang and Chicony Electronics 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 Lien Chang and Chicony Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lien Chang Electronic and Chicony Electronics Co, you can compare the effects of market volatilities on Lien Chang and Chicony Electronics 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 Lien Chang with a short position of Chicony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lien Chang and Chicony Electronics.
Diversification Opportunities for Lien Chang and Chicony Electronics
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lien and Chicony is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lien Chang Electronic and Chicony Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Electronics and Lien Chang 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 Lien Chang Electronic are associated (or correlated) with Chicony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Electronics has no effect on the direction of Lien Chang i.e., Lien Chang and Chicony Electronics go up and down completely randomly.
Pair Corralation between Lien Chang and Chicony Electronics
Assuming the 90 days trading horizon Lien Chang Electronic is expected to under-perform the Chicony Electronics. In addition to that, Lien Chang is 1.13 times more volatile than Chicony Electronics Co. It trades about -0.1 of its total potential returns per unit of risk. Chicony Electronics Co is currently generating about -0.06 per unit of volatility. If you would invest 21,400 in Chicony Electronics Co on February 8, 2024 and sell it today you would lose (550.00) from holding Chicony Electronics Co or give up 2.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lien Chang Electronic vs. Chicony Electronics Co
Performance |
Timeline |
Lien Chang Electronic |
Chicony Electronics |
Lien Chang and Chicony Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lien Chang and Chicony Electronics
The main advantage of trading using opposite Lien Chang and Chicony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lien Chang position performs unexpectedly, Chicony Electronics 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 Chicony Electronics will offset losses from the drop in Chicony Electronics' long position.Lien Chang vs. Taiwan Semiconductor Manufacturing | Lien Chang vs. Chunghwa Telecom Co | Lien Chang vs. Formosa Petrochemical Corp | Lien Chang vs. Delta Electronics |
Chicony Electronics vs. Taiwan Semiconductor Manufacturing | Chicony Electronics vs. Chunghwa Telecom Co | Chicony Electronics vs. Formosa Petrochemical Corp | Chicony Electronics vs. Delta Electronics |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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