Correlation Between Standard Foods and Taiwan FamilyMart
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Taiwan FamilyMart 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 Standard Foods and Taiwan FamilyMart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Taiwan FamilyMart Co, you can compare the effects of market volatilities on Standard Foods and Taiwan FamilyMart 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 Standard Foods with a short position of Taiwan FamilyMart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Taiwan FamilyMart.
Diversification Opportunities for Standard Foods and Taiwan FamilyMart
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Standard and Taiwan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Taiwan FamilyMart Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan FamilyMart and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Taiwan FamilyMart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan FamilyMart has no effect on the direction of Standard Foods i.e., Standard Foods and Taiwan FamilyMart go up and down completely randomly.
Pair Corralation between Standard Foods and Taiwan FamilyMart
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the Taiwan FamilyMart. In addition to that, Standard Foods is 1.42 times more volatile than Taiwan FamilyMart Co. It trades about -0.07 of its total potential returns per unit of risk. Taiwan FamilyMart Co is currently generating about 0.04 per unit of volatility. If you would invest 18,750 in Taiwan FamilyMart Co on September 3, 2024 and sell it today you would earn a total of 250.00 from holding Taiwan FamilyMart Co or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Taiwan FamilyMart Co
Performance |
| Timeline |
| Standard Foods Corp |
| Taiwan FamilyMart |
Standard Foods and Taiwan FamilyMart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Taiwan FamilyMart
The main advantage of trading using opposite Standard Foods and Taiwan FamilyMart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Taiwan FamilyMart 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 FamilyMart will offset losses from the drop in Taiwan FamilyMart's long position.| Standard Foods vs. TTET Union Corp | Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. Charoen Pokphand Enterprise |
| Taiwan FamilyMart vs. Standard Foods Corp | Taiwan FamilyMart vs. TTET Union Corp | Taiwan FamilyMart vs. Uni President Enterprises Corp | Taiwan FamilyMart vs. Charoen Pokphand Enterprise |
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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