Correlation Between Taiwan Cement and Kinko Optical
Can any of the company-specific risk be diversified away by investing in both Taiwan Cement and Kinko Optical 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 Kinko Optical 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 Kinko Optical Co, you can compare the effects of market volatilities on Taiwan Cement and Kinko Optical 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 Kinko Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cement and Kinko Optical.
Diversification Opportunities for Taiwan Cement and Kinko Optical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Taiwan and Kinko is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cement Corp and Kinko Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinko Optical 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 Kinko Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinko Optical has no effect on the direction of Taiwan Cement i.e., Taiwan Cement and Kinko Optical go up and down completely randomly.
Pair Corralation between Taiwan Cement and Kinko Optical
Assuming the 90 days trading horizon Taiwan Cement Corp is expected to generate 0.71 times more return on investment than Kinko Optical. However, Taiwan Cement Corp is 1.41 times less risky than Kinko Optical. It trades about 0.1 of its potential returns per unit of risk. Kinko Optical Co is currently generating about 0.02 per unit of risk. If you would invest 3,150 in Taiwan Cement Corp on September 12, 2024 and sell it today you would earn a total of 165.00 from holding Taiwan Cement Corp or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Cement Corp vs. Kinko Optical Co
Performance |
| Timeline |
| Taiwan Cement Corp |
| Kinko Optical |
Taiwan Cement and Kinko Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cement and Kinko Optical
The main advantage of trading using opposite Taiwan Cement and Kinko Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cement position performs unexpectedly, Kinko Optical 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 Kinko Optical will offset losses from the drop in Kinko Optical's long position.| Taiwan Cement vs. Tainan Spinning Co | Taiwan Cement vs. Lealea Enterprise Co | Taiwan Cement vs. China Petrochemical Development | Taiwan Cement vs. Ruentex Development Co |
| Kinko Optical vs. AU Optronics | Kinko Optical vs. Innolux Corp | Kinko Optical vs. Ruentex Development Co | Kinko Optical vs. WiseChip Semiconductor |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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