Correlation Between Taiwan Cement and Kworld Computer
Can any of the company-specific risk be diversified away by investing in both Taiwan Cement and Kworld Computer 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 Kworld Computer 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 Kworld Computer Co, you can compare the effects of market volatilities on Taiwan Cement and Kworld Computer 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 Kworld Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Cement and Kworld Computer.
Diversification Opportunities for Taiwan Cement and Kworld Computer
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and Kworld is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Cement Corp and Kworld Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kworld Computer 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 Kworld Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kworld Computer has no effect on the direction of Taiwan Cement i.e., Taiwan Cement and Kworld Computer go up and down completely randomly.
Pair Corralation between Taiwan Cement and Kworld Computer
Assuming the 90 days trading horizon Taiwan Cement is expected to generate 23.43 times less return on investment than Kworld Computer. But when comparing it to its historical volatility, Taiwan Cement Corp is 20.26 times less risky than Kworld Computer. It trades about 0.06 of its potential returns per unit of risk. Kworld Computer Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,320 in Kworld Computer Co on October 9, 2024 and sell it today you would earn a total of 2,175 from holding Kworld Computer Co or generate 164.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Cement Corp vs. Kworld Computer Co
Performance |
| Timeline |
| Taiwan Cement Corp |
| Kworld Computer |
Taiwan Cement and Kworld Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Cement and Kworld Computer
The main advantage of trading using opposite Taiwan Cement and Kworld Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Cement position performs unexpectedly, Kworld Computer 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 Kworld Computer will offset losses from the drop in Kworld Computer's long position.| Taiwan Cement vs. Yonyu Plastics Co | Taiwan Cement vs. Trade Van Information Services | Taiwan Cement vs. Gloria Material Technology | Taiwan Cement vs. FineMat Applied Materials |
| Kworld Computer vs. GrandTech CG Systems | Kworld Computer vs. Answer Technology Co | Kworld Computer vs. Xander International | Kworld Computer vs. MetaTech AP |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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