Correlation Between Taiwan Semiconductor and Itasa Investimentos

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

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

Diversification Opportunities for Taiwan Semiconductor and Itasa Investimentos

0.24

Correlation Coefficient

Taiwan Semiconductor  Itasa Investimentos

Modest diversification

The 3 months correlation between Taiwan and Itasa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Semiconductor Manufactu and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos and Taiwan Semiconductor 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 Semiconductor Manufacturing are associated (or correlated) with Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of Taiwan Semiconductor i.e., Taiwan Semiconductor and Itasa Investimentos go up and down completely randomly.

Pair Corralation between Taiwan Semiconductor and Itasa Investimentos

Assuming the 90 days trading horizon Taiwan Semiconductor Manufacturing is expected to generate 1.66 times more return on investment than Itasa Investimentos. However, Taiwan Semiconductor is 1.66 times more volatile than Itasa Investimentos. It trades about 0.37 of its potential returns per unit of risk. Itasa Investimentos is currently generating about 0.05 per unit of risk. If you would invest  10,728  in Taiwan Semiconductor Manufacturing on April 22, 2025 and sell it today you would earn a total of  6,035  from holding Taiwan Semiconductor Manufacturing or generate 56.25% return on investment over 90 days.

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

Taiwan Semiconductor Manufactu  vs.  Itasa Investimentos

Taiwan Semiconductor

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Semiconductor Manufacturing are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Taiwan Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Itasa Investimentos

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Itasa Investimentos are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Itasa Investimentos is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Taiwan Semiconductor and Itasa Investimentos

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

The idea behind Taiwan Semiconductor Manufacturing and Itasa Investimentos 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.