Correlation Between Taita Chemical and First Insurance
Can any of the company-specific risk be diversified away by investing in both Taita Chemical and First Insurance 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 Taita Chemical and First Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taita Chemical Co and First Insurance Co, you can compare the effects of market volatilities on Taita Chemical and First Insurance 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 Taita Chemical with a short position of First Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taita Chemical and First Insurance.
Diversification Opportunities for Taita Chemical and First Insurance
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taita and First is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Taita Chemical Co and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance and Taita Chemical 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 Taita Chemical Co are associated (or correlated) with First Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Insurance has no effect on the direction of Taita Chemical i.e., Taita Chemical and First Insurance go up and down completely randomly.
Pair Corralation between Taita Chemical and First Insurance
Assuming the 90 days trading horizon Taita Chemical Co is expected to under-perform the First Insurance. In addition to that, Taita Chemical is 1.89 times more volatile than First Insurance Co. It trades about -0.26 of its total potential returns per unit of risk. First Insurance Co is currently generating about 0.34 per unit of volatility. If you would invest 2,280 in First Insurance Co on August 30, 2024 and sell it today you would earn a total of 180.00 from holding First Insurance Co or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taita Chemical Co vs. First Insurance Co
Performance |
| Timeline |
| Taita Chemical |
| First Insurance |
Taita Chemical and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taita Chemical and First Insurance
The main advantage of trading using opposite Taita Chemical and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taita Chemical position performs unexpectedly, First Insurance 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 First Insurance will offset losses from the drop in First Insurance's long position.| Taita Chemical vs. China General Plastics | Taita Chemical vs. Asia Polymer Corp | Taita Chemical vs. USI Corp | Taita Chemical vs. Grand Pacific Petrochemical |
| First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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