Correlation Between Tainan Spinning and Chia Her
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Chia Her 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 Tainan Spinning and Chia Her into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Spinning Co and Chia Her Industrial, you can compare the effects of market volatilities on Tainan Spinning and Chia Her 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 Tainan Spinning with a short position of Chia Her. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Chia Her.
Diversification Opportunities for Tainan Spinning and Chia Her
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tainan and Chia is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Chia Her Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Her Industrial and Tainan Spinning 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 Tainan Spinning Co are associated (or correlated) with Chia Her. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Her Industrial has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Chia Her go up and down completely randomly.
Pair Corralation between Tainan Spinning and Chia Her
Assuming the 90 days trading horizon Tainan Spinning Co is expected to under-perform the Chia Her. But the stock apears to be less risky and, when comparing its historical volatility, Tainan Spinning Co is 2.13 times less risky than Chia Her. The stock trades about -0.01 of its potential returns per unit of risk. The Chia Her Industrial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,585 in Chia Her Industrial on September 4, 2024 and sell it today you would earn a total of 815.00 from holding Chia Her Industrial or generate 51.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. Chia Her Industrial
Performance |
| Timeline |
| Tainan Spinning |
| Chia Her Industrial |
Tainan Spinning and Chia Her Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Chia Her
The main advantage of trading using opposite Tainan Spinning and Chia Her positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Chia Her 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 Chia Her will offset losses from the drop in Chia Her's long position.| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Li Peng Enterprise | Tainan Spinning vs. Oriental Union Chemical |
| Chia Her vs. Carnival Industrial Corp | Chia Her vs. I Hwa Industrial Co | Chia Her vs. Hung Chou Fiber | Chia Her vs. Tung Ho Textile |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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