Correlation Between Tainan Spinning and Zig Sheng
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Zig Sheng 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 Zig Sheng 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 Zig Sheng Industrial, you can compare the effects of market volatilities on Tainan Spinning and Zig Sheng 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 Zig Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Zig Sheng.
Diversification Opportunities for Tainan Spinning and Zig Sheng
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tainan and Zig is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Zig Sheng Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zig Sheng 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 Zig Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zig Sheng Industrial has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Zig Sheng go up and down completely randomly.
Pair Corralation between Tainan Spinning and Zig Sheng
Assuming the 90 days trading horizon Tainan Spinning Co is expected to under-perform the Zig Sheng. But the stock apears to be less risky and, when comparing its historical volatility, Tainan Spinning Co is 1.61 times less risky than Zig Sheng. The stock trades about -0.24 of its potential returns per unit of risk. The Zig Sheng Industrial is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 968.00 in Zig Sheng Industrial on October 24, 2024 and sell it today you would lose (44.00) from holding Zig Sheng Industrial or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. Zig Sheng Industrial
Performance |
| Timeline |
| Tainan Spinning |
| Zig Sheng Industrial |
Tainan Spinning and Zig Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Zig Sheng
The main advantage of trading using opposite Tainan Spinning and Zig Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Zig Sheng 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 Zig Sheng will offset losses from the drop in Zig Sheng'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 |
| Zig Sheng vs. Lealea Enterprise Co | Zig Sheng vs. Tainan Spinning Co | Zig Sheng vs. Li Peng Enterprise | Zig Sheng vs. Shinkong Synthetic Fiber |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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