Correlation Between Lian Hwa and Taiwan Cement
Can any of the company-specific risk be diversified away by investing in both Lian Hwa 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 Lian Hwa and Taiwan Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lian Hwa Foods and Taiwan Cement Corp, you can compare the effects of market volatilities on Lian Hwa 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 Lian Hwa with a short position of Taiwan Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Taiwan Cement.
Diversification Opportunities for Lian Hwa and Taiwan Cement
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lian and Taiwan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods 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 Lian Hwa 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 Lian Hwa Foods 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 Lian Hwa i.e., Lian Hwa and Taiwan Cement go up and down completely randomly.
Pair Corralation between Lian Hwa and Taiwan Cement
Assuming the 90 days trading horizon Lian Hwa is expected to generate 1.29 times less return on investment than Taiwan Cement. In addition to that, Lian Hwa is 1.66 times more volatile than Taiwan Cement Corp. It trades about 0.11 of its total potential returns per unit of risk. Taiwan Cement Corp is currently generating about 0.24 per unit of volatility. If you would invest 3,200 in Taiwan Cement Corp on August 25, 2024 and sell it today you would earn a total of 135.00 from holding Taiwan Cement Corp or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lian Hwa Foods vs. Taiwan Cement Corp
Performance |
| Timeline |
| Lian Hwa Foods |
| Taiwan Cement Corp |
Lian Hwa and Taiwan Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Taiwan Cement
The main advantage of trading using opposite Lian Hwa and Taiwan Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa 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.| Lian Hwa vs. Uni President Enterprises Corp | Lian Hwa vs. Taiwan Cement Corp | Lian Hwa vs. Ruentex Development Co | Lian Hwa vs. Symtek Automation Asia |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |