Correlation Between Lucky Cement and Tainan Spinning
Can any of the company-specific risk be diversified away by investing in both Lucky Cement and Tainan Spinning 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 Lucky Cement and Tainan Spinning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucky Cement Co and Tainan Spinning Co, you can compare the effects of market volatilities on Lucky Cement and Tainan Spinning 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 Lucky Cement with a short position of Tainan Spinning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and Tainan Spinning.
Diversification Opportunities for Lucky Cement and Tainan Spinning
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lucky and Tainan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement Co and Tainan Spinning Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Spinning and Lucky 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 Lucky Cement Co are associated (or correlated) with Tainan Spinning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Spinning has no effect on the direction of Lucky Cement i.e., Lucky Cement and Tainan Spinning go up and down completely randomly.
Pair Corralation between Lucky Cement and Tainan Spinning
Assuming the 90 days trading horizon Lucky Cement Co is expected to generate 0.54 times more return on investment than Tainan Spinning. However, Lucky Cement Co is 1.85 times less risky than Tainan Spinning. It trades about -0.16 of its potential returns per unit of risk. Tainan Spinning Co is currently generating about -0.61 per unit of risk. If you would invest 1,450 in Lucky Cement Co on October 7, 2024 and sell it today you would lose (20.00) from holding Lucky Cement Co or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lucky Cement Co vs. Tainan Spinning Co
Performance |
| Timeline |
| Lucky Cement |
| Tainan Spinning |
Lucky Cement and Tainan Spinning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucky Cement and Tainan Spinning
The main advantage of trading using opposite Lucky Cement and Tainan Spinning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucky Cement position performs unexpectedly, Tainan Spinning 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 Tainan Spinning will offset losses from the drop in Tainan Spinning's long position.| Lucky Cement vs. Universal Cement Corp | Lucky Cement vs. Chia Hsin Cement | Lucky Cement vs. Hsing Ta Cement | Lucky Cement vs. Asia Cement Corp |
| Tainan Spinning vs. Ruentex Development Co | Tainan Spinning vs. WiseChip Semiconductor | Tainan Spinning vs. Leader Electronics | Tainan Spinning vs. CTCI 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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