Correlation Between Taiwan Styrene and Kaulin Mfg
Can any of the company-specific risk be diversified away by investing in both Taiwan Styrene and Kaulin Mfg 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 Kaulin Mfg 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 Kaulin Mfg, you can compare the effects of market volatilities on Taiwan Styrene and Kaulin Mfg 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 Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Styrene and Kaulin Mfg.
Diversification Opportunities for Taiwan Styrene and Kaulin Mfg
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Taiwan and Kaulin is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Styrene Monomer and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg 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 Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of Taiwan Styrene i.e., Taiwan Styrene and Kaulin Mfg go up and down completely randomly.
Pair Corralation between Taiwan Styrene and Kaulin Mfg
Assuming the 90 days trading horizon Taiwan Styrene Monomer is expected to generate 1.08 times more return on investment than Kaulin Mfg. However, Taiwan Styrene is 1.08 times more volatile than Kaulin Mfg. It trades about -0.09 of its potential returns per unit of risk. Kaulin Mfg is currently generating about -0.13 per unit of risk. If you would invest 1,160 in Taiwan Styrene Monomer on November 27, 2024 and sell it today you would lose (115.00) from holding Taiwan Styrene Monomer or give up 9.91% 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. Kaulin Mfg
Performance |
| Timeline |
| Taiwan Styrene Monomer |
| Kaulin Mfg |
Taiwan Styrene and Kaulin Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Styrene and Kaulin Mfg
The main advantage of trading using opposite Taiwan Styrene and Kaulin Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Styrene position performs unexpectedly, Kaulin Mfg 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 Kaulin Mfg will offset losses from the drop in Kaulin Mfg's long position.| Taiwan Styrene vs. Grand Pacific Petrochemical | Taiwan Styrene vs. USI Corp | Taiwan Styrene vs. Asia Polymer Corp | Taiwan Styrene vs. China Petrochemical Development |
| Kaulin Mfg vs. Tainan Enterprises Co | Kaulin Mfg vs. Nien Hsing Textile | Kaulin Mfg vs. De Licacy Industrial | Kaulin Mfg vs. Kwong Fong Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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