Correlation Between Hsing Ta and Taiwan Cement
Can any of the company-specific risk be diversified away by investing in both Hsing Ta and Taiwan Cement 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 Hsing Ta and Taiwan Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsing Ta Cement and Taiwan Cement Corp, you can compare the effects of market volatilities on Hsing Ta and Taiwan Cement 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 Hsing Ta with a short position of Taiwan Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsing Ta and Taiwan Cement.
Diversification Opportunities for Hsing Ta and Taiwan Cement
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hsing and Taiwan is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hsing Ta Cement and Taiwan Cement Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cement Corp and Hsing Ta 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 Hsing Ta Cement are associated (or correlated) with Taiwan Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cement Corp has no effect on the direction of Hsing Ta i.e., Hsing Ta and Taiwan Cement go up and down completely randomly.
Pair Corralation between Hsing Ta and Taiwan Cement
Assuming the 90 days trading horizon Hsing Ta Cement is expected to under-perform the Taiwan Cement. In addition to that, Hsing Ta is 1.02 times more volatile than Taiwan Cement Corp. It trades about -0.04 of its total potential returns per unit of risk. Taiwan Cement Corp is currently generating about 0.02 per unit of volatility. If you would invest 3,300 in Taiwan Cement Corp on September 1, 2024 and sell it today you would earn a total of 50.00 from holding Taiwan Cement Corp or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Hsing Ta Cement vs. Taiwan Cement Corp
Performance |
| Timeline |
| Hsing Ta Cement |
| Taiwan Cement Corp |
Hsing Ta and Taiwan Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsing Ta and Taiwan Cement
The main advantage of trading using opposite Hsing Ta and Taiwan Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsing Ta position performs unexpectedly, Taiwan Cement 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 Taiwan Cement will offset losses from the drop in Taiwan Cement's long position.| Hsing Ta vs. Universal Cement Corp | Hsing Ta vs. Chia Hsin Cement | Hsing Ta vs. AGV Products Corp | Hsing Ta vs. Grand Pacific Petrochemical |
| Taiwan Cement vs. Asia Cement Corp | Taiwan Cement vs. Formosa Plastics Corp | Taiwan Cement vs. Nan Ya Plastics | Taiwan Cement vs. China Steel 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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