Correlation Between Taiwan Cement and Chong Hong
Can any of the company-specific risk be diversified away by investing in both Taiwan Cement and Chong Hong 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 Chong Hong 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 Chong Hong Construction, you can compare the effects of market volatilities on Taiwan Cement and Chong Hong 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 Chong Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cement and Chong Hong.
Diversification Opportunities for Taiwan Cement and Chong Hong
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Chong is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cement Corp and Chong Hong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chong Hong Construction 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 Chong Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chong Hong Construction has no effect on the direction of Taiwan Cement i.e., Taiwan Cement and Chong Hong go up and down completely randomly.
Pair Corralation between Taiwan Cement and Chong Hong
Assuming the 90 days trading horizon Taiwan Cement is expected to generate 1.53 times less return on investment than Chong Hong. But when comparing it to its historical volatility, Taiwan Cement Corp is 1.1 times less risky than Chong Hong. It trades about 0.34 of its potential returns per unit of risk. Chong Hong Construction is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 8,370 in Chong Hong Construction on November 28, 2024 and sell it today you would earn a total of 1,330 from holding Chong Hong Construction or generate 15.89% 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. Chong Hong Construction
Performance |
| Timeline |
| Taiwan Cement Corp |
| Chong Hong Construction |
Taiwan Cement and Chong Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cement and Chong Hong
The main advantage of trading using opposite Taiwan Cement and Chong Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cement position performs unexpectedly, Chong Hong 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 Chong Hong will offset losses from the drop in Chong Hong'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 |
| Chong Hong vs. Huaku Development Co | Chong Hong vs. Farglory Land Development | Chong Hong vs. Highwealth Construction Corp | Chong Hong vs. Ruentex Development 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |