Correlation Between Taiwan Cement and Chung Hung
Can any of the company-specific risk be diversified away by investing in both Taiwan Cement and Chung Hung 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 Cement and Chung Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Cement Corp and Chung Hung Steel, you can compare the effects of market volatilities on Taiwan Cement and Chung Hung 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 Cement with a short position of Chung Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cement and Chung Hung.
Diversification Opportunities for Taiwan Cement and Chung Hung
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taiwan and Chung is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cement Corp and Chung Hung Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Hung Steel and Taiwan Cement 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 Cement Corp are associated (or correlated) with Chung Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Hung Steel has no effect on the direction of Taiwan Cement i.e., Taiwan Cement and Chung Hung go up and down completely randomly.
Pair Corralation between Taiwan Cement and Chung Hung
Assuming the 90 days trading horizon Taiwan Cement Corp is expected to generate 0.53 times more return on investment than Chung Hung. However, Taiwan Cement Corp is 1.88 times less risky than Chung Hung. It trades about 0.01 of its potential returns per unit of risk. Chung Hung Steel is currently generating about 0.0 per unit of risk. If you would invest 3,320 in Taiwan Cement Corp on August 29, 2024 and sell it today you would earn a total of 60.00 from holding Taiwan Cement Corp or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Taiwan Cement Corp vs. Chung Hung Steel
Performance |
| Timeline |
| Taiwan Cement Corp |
| Chung Hung Steel |
Taiwan Cement and Chung Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cement and Chung Hung
The main advantage of trading using opposite Taiwan Cement and Chung Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cement position performs unexpectedly, Chung Hung 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 Chung Hung will offset losses from the drop in Chung Hung's long position.| Taiwan Cement vs. Cheng Shin Rubber | Taiwan Cement vs. China Steel Chemical | Taiwan Cement vs. Yulon Motor Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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