Correlation Between TTET Union and Capital Securities
Can any of the company-specific risk be diversified away by investing in both TTET Union and Capital Securities 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 TTET Union and Capital Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TTET Union Corp and Capital Securities Corp, you can compare the effects of market volatilities on TTET Union and Capital Securities 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 TTET Union with a short position of Capital Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of TTET Union and Capital Securities.
Diversification Opportunities for TTET Union and Capital Securities
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TTET and Capital is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TTET Union Corp and Capital Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Securities Corp and TTET Union 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 TTET Union Corp are associated (or correlated) with Capital Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Securities Corp has no effect on the direction of TTET Union i.e., TTET Union and Capital Securities go up and down completely randomly.
Pair Corralation between TTET Union and Capital Securities
Assuming the 90 days trading horizon TTET Union is expected to generate 81.5 times less return on investment than Capital Securities. But when comparing it to its historical volatility, TTET Union Corp is 2.28 times less risky than Capital Securities. It trades about 0.0 of its potential returns per unit of risk. Capital Securities Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,150 in Capital Securities Corp on August 30, 2024 and sell it today you would earn a total of 1,030 from holding Capital Securities Corp or generate 89.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TTET Union Corp vs. Capital Securities Corp
Performance |
| Timeline |
| TTET Union Corp |
| Capital Securities Corp |
TTET Union and Capital Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TTET Union and Capital Securities
The main advantage of trading using opposite TTET Union and Capital Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TTET Union position performs unexpectedly, Capital Securities 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 Capital Securities will offset losses from the drop in Capital Securities' long position.| TTET Union vs. Great Wall Enterprise | TTET Union vs. Uni President Enterprises Corp | TTET Union vs. Lien Hwa Industrial |
| Capital Securities vs. Taiwan Secom Co | Capital Securities vs. TTET Union Corp | Capital Securities vs. China Steel Chemical | Capital Securities vs. Taiwan Shin Kong |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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