Correlation Between Taiwan Cement and Nantex Industry
Can any of the company-specific risk be diversified away by investing in both Taiwan Cement and Nantex Industry 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 Nantex Industry 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 Nantex Industry Co, you can compare the effects of market volatilities on Taiwan Cement and Nantex Industry 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 Nantex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cement and Nantex Industry.
Diversification Opportunities for Taiwan Cement and Nantex Industry
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Nantex is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cement Corp and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry 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 Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of Taiwan Cement i.e., Taiwan Cement and Nantex Industry go up and down completely randomly.
Pair Corralation between Taiwan Cement and Nantex Industry
Assuming the 90 days trading horizon Taiwan Cement Corp is expected to generate 0.47 times more return on investment than Nantex Industry. However, Taiwan Cement Corp is 2.15 times less risky than Nantex Industry. It trades about 0.26 of its potential returns per unit of risk. Nantex Industry Co is currently generating about -0.06 per unit of risk. If you would invest 3,215 in Taiwan Cement Corp on August 29, 2024 and sell it today you would earn a total of 165.00 from holding Taiwan Cement Corp or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Taiwan Cement Corp vs. Nantex Industry Co
Performance |
| Timeline |
| Taiwan Cement Corp |
| Nantex Industry |
Taiwan Cement and Nantex Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cement and Nantex Industry
The main advantage of trading using opposite Taiwan Cement and Nantex Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cement position performs unexpectedly, Nantex Industry 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 Nantex Industry will offset losses from the drop in Nantex Industry's long position.| Taiwan Cement vs. China Man Made Fiber | Taiwan Cement vs. USI Corp | Taiwan Cement vs. China Petrochemical Development | Taiwan Cement vs. Yulon Motor Co |
| Nantex Industry vs. International CSRC Investment | Nantex Industry vs. TSRC Corp | Nantex Industry vs. Ruentex Industries | Nantex Industry vs. Cheng Shin Rubber |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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