Correlation Between Taiwan Styrene and UPC Technology
Can any of the company-specific risk be diversified away by investing in both Taiwan Styrene and UPC Technology 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 Taiwan Styrene and UPC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Styrene Monomer and UPC Technology Corp, you can compare the effects of market volatilities on Taiwan Styrene and UPC Technology 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 Taiwan Styrene with a short position of UPC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Styrene and UPC Technology.
Diversification Opportunities for Taiwan Styrene and UPC Technology
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Taiwan and UPC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Styrene Monomer and UPC Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPC Technology Corp and Taiwan Styrene 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 Taiwan Styrene Monomer are associated (or correlated) with UPC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPC Technology Corp has no effect on the direction of Taiwan Styrene i.e., Taiwan Styrene and UPC Technology go up and down completely randomly.
Pair Corralation between Taiwan Styrene and UPC Technology
Assuming the 90 days trading horizon Taiwan Styrene Monomer is expected to under-perform the UPC Technology. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Styrene Monomer is 1.51 times less risky than UPC Technology. The stock trades about -0.16 of its potential returns per unit of risk. The UPC Technology Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,145 in UPC Technology Corp on August 29, 2024 and sell it today you would lose (40.00) from holding UPC Technology Corp or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Styrene Monomer vs. UPC Technology Corp
Performance |
| Timeline |
| Taiwan Styrene Monomer |
| UPC Technology Corp |
Taiwan Styrene and UPC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Styrene and UPC Technology
The main advantage of trading using opposite Taiwan Styrene and UPC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Styrene position performs unexpectedly, UPC Technology 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 UPC Technology will offset losses from the drop in UPC Technology's long position.| Taiwan Styrene vs. Cheng Shin Rubber | Taiwan Styrene vs. China Steel Chemical | Taiwan Styrene vs. Yulon Motor Co |
| UPC Technology vs. Cheng Shin Rubber | UPC Technology vs. China Steel Chemical | UPC Technology vs. Yulon Motor 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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