Correlation Between Taita Chemical and Sports Gear
Can any of the company-specific risk be diversified away by investing in both Taita Chemical and Sports Gear 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 Sports Gear 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 Sports Gear Co, you can compare the effects of market volatilities on Taita Chemical and Sports Gear 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 Sports Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taita Chemical and Sports Gear.
Diversification Opportunities for Taita Chemical and Sports Gear
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Taita and Sports is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Taita Chemical Co and Sports Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Gear 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 Sports Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Gear has no effect on the direction of Taita Chemical i.e., Taita Chemical and Sports Gear go up and down completely randomly.
Pair Corralation between Taita Chemical and Sports Gear
Assuming the 90 days trading horizon Taita Chemical is expected to generate 3.39 times less return on investment than Sports Gear. But when comparing it to its historical volatility, Taita Chemical Co is 1.95 times less risky than Sports Gear. It trades about 0.22 of its potential returns per unit of risk. Sports Gear Co is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 13,300 in Sports Gear Co on November 27, 2024 and sell it today you would earn a total of 3,300 from holding Sports Gear Co or generate 24.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taita Chemical Co vs. Sports Gear Co
Performance |
| Timeline |
| Taita Chemical |
| Sports Gear |
Taita Chemical and Sports Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taita Chemical and Sports Gear
The main advantage of trading using opposite Taita Chemical and Sports Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taita Chemical position performs unexpectedly, Sports Gear 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 Sports Gear will offset losses from the drop in Sports Gear'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 |
| Sports Gear vs. Feng Tay Enterprises | Sports Gear vs. Pou Chen Corp | Sports Gear vs. Fulgent Sun International | Sports Gear vs. Taiwan Paiho |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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