Correlation Between Taiwan Cement and Taiwan High
Can any of the company-specific risk be diversified away by investing in both Taiwan Cement and Taiwan High 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 Taiwan High 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 Taiwan High Speed, you can compare the effects of market volatilities on Taiwan Cement and Taiwan High 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 Taiwan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cement and Taiwan High.
Diversification Opportunities for Taiwan Cement and Taiwan High
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Taiwan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cement Corp and Taiwan High Speed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan High Speed 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 Taiwan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan High Speed has no effect on the direction of Taiwan Cement i.e., Taiwan Cement and Taiwan High go up and down completely randomly.
Pair Corralation between Taiwan Cement and Taiwan High
Assuming the 90 days trading horizon Taiwan Cement Corp is expected to generate 1.15 times more return on investment than Taiwan High. However, Taiwan Cement is 1.15 times more volatile than Taiwan High Speed. It trades about 0.03 of its potential returns per unit of risk. Taiwan High Speed is currently generating about -0.12 per unit of risk. If you would invest 3,170 in Taiwan Cement Corp on October 29, 2024 and sell it today you would earn a total of 15.00 from holding Taiwan Cement Corp or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Cement Corp vs. Taiwan High Speed
Performance |
| Timeline |
| Taiwan Cement Corp |
| Taiwan High Speed |
Taiwan Cement and Taiwan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cement and Taiwan High
The main advantage of trading using opposite Taiwan Cement and Taiwan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cement position performs unexpectedly, Taiwan High 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 Taiwan High will offset losses from the drop in Taiwan High's long position.| Taiwan Cement vs. Asia Cement Corp | Taiwan Cement vs. Formosa Plastics Corp | Taiwan Cement vs. Nan Ya Plastics | Taiwan Cement vs. China Steel Corp |
| Taiwan High vs. Chunghwa Telecom Co | Taiwan High vs. ESUN Financial Holding | Taiwan High vs. Mega Financial Holding | Taiwan High vs. Taiwan Cement Corp |
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.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |