Correlation Between Shin Tai and Taiwan Glass
Can any of the company-specific risk be diversified away by investing in both Shin Tai and Taiwan Glass 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 Shin Tai and Taiwan Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Tai Industry and Taiwan Glass Ind, you can compare the effects of market volatilities on Shin Tai and Taiwan Glass 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 Shin Tai with a short position of Taiwan Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Taiwan Glass.
Diversification Opportunities for Shin Tai and Taiwan Glass
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shin and Taiwan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Taiwan Glass Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Glass Ind and Shin Tai 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 Shin Tai Industry are associated (or correlated) with Taiwan Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Glass Ind has no effect on the direction of Shin Tai i.e., Shin Tai and Taiwan Glass go up and down completely randomly.
Pair Corralation between Shin Tai and Taiwan Glass
Assuming the 90 days trading horizon Shin Tai Industry is expected to under-perform the Taiwan Glass. But the stock apears to be less risky and, when comparing its historical volatility, Shin Tai Industry is 1.6 times less risky than Taiwan Glass. The stock trades about -0.15 of its potential returns per unit of risk. The Taiwan Glass Ind is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,945 in Taiwan Glass Ind on September 1, 2024 and sell it today you would earn a total of 75.00 from holding Taiwan Glass Ind or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Tai Industry vs. Taiwan Glass Ind
Performance |
| Timeline |
| Shin Tai Industry |
| Taiwan Glass Ind |
Shin Tai and Taiwan Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Tai and Taiwan Glass
The main advantage of trading using opposite Shin Tai and Taiwan Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, Taiwan Glass 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 Glass will offset losses from the drop in Taiwan Glass' long position.| Shin Tai vs. De Licacy Industrial | Shin Tai vs. Wisher Industrial Co | Shin Tai vs. Tainan Enterprises Co |
| Taiwan Glass vs. Yulon Motor Co | Taiwan Glass vs. Far Eastern Department | Taiwan Glass vs. China Steel Corp | Taiwan Glass vs. Chang Hwa Commercial |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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