Correlation Between Taiwan Cement and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both Taiwan Cement and Giant Manufacturing 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 Giant Manufacturing 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 Giant Manufacturing Co, you can compare the effects of market volatilities on Taiwan Cement and Giant Manufacturing 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 Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cement and Giant Manufacturing.
Diversification Opportunities for Taiwan Cement and Giant Manufacturing
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Taiwan and Giant is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cement Corp and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing 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 Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of Taiwan Cement i.e., Taiwan Cement and Giant Manufacturing go up and down completely randomly.
Pair Corralation between Taiwan Cement and Giant Manufacturing
Assuming the 90 days trading horizon Taiwan Cement Corp is expected to generate 0.43 times more return on investment than Giant Manufacturing. However, Taiwan Cement Corp is 2.34 times less risky than Giant Manufacturing. It trades about 0.27 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.38 per unit of risk. If you would invest 3,215 in Taiwan Cement Corp on August 28, 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 | 100.0% |
| Values | Daily Returns |
Taiwan Cement Corp vs. Giant Manufacturing Co
Performance |
| Timeline |
| Taiwan Cement Corp |
| Giant Manufacturing |
Taiwan Cement and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cement and Giant Manufacturing
The main advantage of trading using opposite Taiwan Cement and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cement position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing's long position.| Taiwan Cement vs. Cheng Shin Rubber | Taiwan Cement vs. China Steel Chemical | Taiwan Cement vs. Yulon Motor Co |
| Giant Manufacturing vs. Taiwan Semiconductor Manufacturing | Giant Manufacturing vs. Hon Hai Precision | Giant Manufacturing vs. MediaTek | Giant Manufacturing vs. Chunghwa Telecom 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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