Correlation Between New Concept and ChipMOS Technologies

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

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

Diversification Opportunities for New Concept and ChipMOS Technologies

0.42

Correlation Coefficient

New Concept  ChipMOS Technologies

Very weak diversification

The 3 months correlation between New and ChipMOS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding New Concept Energy and ChipMOS Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipMOS Technologies and New Concept 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 New Concept Energy are associated (or correlated) with ChipMOS Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipMOS Technologies has no effect on the direction of New Concept i.e., New Concept and ChipMOS Technologies go up and down completely randomly.

Pair Corralation between New Concept and ChipMOS Technologies

Considering the 90-day investment horizon New Concept Energy is expected to generate 3.78 times more return on investment than ChipMOS Technologies. However, New Concept is 3.78 times more volatile than ChipMOS Technologies. It trades about 0.04 of its potential returns per unit of risk. ChipMOS Technologies is currently generating about 0.0 per unit of risk. If you would invest  80.00  in New Concept Energy on May 4, 2025 and sell it today you would earn a total of  3.00  from holding New Concept Energy or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

New Concept Energy  vs.  ChipMOS Technologies

New Concept Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Concept Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental drivers, New Concept reported solid returns over the last few months and may actually be approaching a breakup point.

ChipMOS Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days ChipMOS Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ChipMOS Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with New Concept and ChipMOS Technologies

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

The idea behind New Concept Energy and ChipMOS Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.