Correlation Between Taiwan Styrene and De Licacy
Can any of the company-specific risk be diversified away by investing in both Taiwan Styrene and De Licacy 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 De Licacy 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 De Licacy Industrial, you can compare the effects of market volatilities on Taiwan Styrene and De Licacy 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 De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Styrene and De Licacy.
Diversification Opportunities for Taiwan Styrene and De Licacy
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Taiwan and 1464 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Styrene Monomer and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial 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 De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of Taiwan Styrene i.e., Taiwan Styrene and De Licacy go up and down completely randomly.
Pair Corralation between Taiwan Styrene and De Licacy
Assuming the 90 days trading horizon Taiwan Styrene Monomer is expected to under-perform the De Licacy. But the stock apears to be less risky and, when comparing its historical volatility, Taiwan Styrene Monomer is 2.41 times less risky than De Licacy. The stock trades about -0.21 of its potential returns per unit of risk. The De Licacy Industrial is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,640 in De Licacy Industrial on September 1, 2024 and sell it today you would lose (85.00) from holding De Licacy Industrial or give up 5.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Styrene Monomer vs. De Licacy Industrial
Performance |
| Timeline |
| Taiwan Styrene Monomer |
| De Licacy Industrial |
Taiwan Styrene and De Licacy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Styrene and De Licacy
The main advantage of trading using opposite Taiwan Styrene and De Licacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Styrene position performs unexpectedly, De Licacy 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 De Licacy will offset losses from the drop in De Licacy's long position.| Taiwan Styrene vs. Basso Industry Corp | Taiwan Styrene vs. Chung Hsin Electric Machinery | Taiwan Styrene vs. TYC Brother Industrial | Taiwan Styrene vs. TECO Electric Machinery |
| De Licacy vs. Tainan Enterprises Co | De Licacy vs. Nien Hsing Textile | De Licacy vs. Wisher Industrial Co | De Licacy vs. Tex Ray Industrial 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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