Correlation Between Tehmag Foods and Taiwan Secom
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Taiwan Secom 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 Tehmag Foods and Taiwan Secom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and Taiwan Secom Co, you can compare the effects of market volatilities on Tehmag Foods and Taiwan Secom 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 Tehmag Foods with a short position of Taiwan Secom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Taiwan Secom.
Diversification Opportunities for Tehmag Foods and Taiwan Secom
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tehmag and Taiwan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Taiwan Secom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Secom and Tehmag 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 Tehmag Foods are associated (or correlated) with Taiwan Secom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Secom has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Taiwan Secom go up and down completely randomly.
Pair Corralation between Tehmag Foods and Taiwan Secom
Assuming the 90 days trading horizon Tehmag Foods is expected to generate 2.22 times less return on investment than Taiwan Secom. But when comparing it to its historical volatility, Tehmag Foods is 2.12 times less risky than Taiwan Secom. It trades about 0.06 of its potential returns per unit of risk. Taiwan Secom Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 10,850 in Taiwan Secom Co on August 25, 2024 and sell it today you would earn a total of 2,750 from holding Taiwan Secom Co or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. Taiwan Secom Co
Performance |
| Timeline |
| Tehmag Foods |
| Taiwan Secom |
Tehmag Foods and Taiwan Secom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and Taiwan Secom
The main advantage of trading using opposite Tehmag Foods and Taiwan Secom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, Taiwan Secom 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 Secom will offset losses from the drop in Taiwan Secom's long position.| Tehmag Foods vs. Uni President Enterprises Corp | Tehmag Foods vs. Tingyi Holding Corp | Tehmag Foods vs. Lien Hwa Industrial | Tehmag Foods vs. Great Wall Enterprise |
| Taiwan Secom vs. Taiwan Shin Kong | Taiwan Secom vs. President Chain Store | Taiwan Secom vs. Yulon Finance Corp | Taiwan Secom vs. Giant Manufacturing Co |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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