Correlation Between Tainan Spinning and Yung Chi
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Yung Chi 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 Yung Chi 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 Yung Chi Paint, you can compare the effects of market volatilities on Tainan Spinning and Yung Chi 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 Yung Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Yung Chi.
Diversification Opportunities for Tainan Spinning and Yung Chi
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tainan and Yung is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Yung Chi Paint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yung Chi Paint 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 Yung Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yung Chi Paint has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Yung Chi go up and down completely randomly.
Pair Corralation between Tainan Spinning and Yung Chi
Assuming the 90 days trading horizon Tainan Spinning Co is expected to generate 1.2 times more return on investment than Yung Chi. However, Tainan Spinning is 1.2 times more volatile than Yung Chi Paint. It trades about -0.08 of its potential returns per unit of risk. Yung Chi Paint is currently generating about -0.12 per unit of risk. If you would invest 1,555 in Tainan Spinning Co on September 13, 2024 and sell it today you would lose (45.00) from holding Tainan Spinning Co or give up 2.89% 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. Yung Chi Paint
Performance |
| Timeline |
| Tainan Spinning |
| Yung Chi Paint |
Tainan Spinning and Yung Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Yung Chi
The main advantage of trading using opposite Tainan Spinning and Yung Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Yung Chi 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 Yung Chi will offset losses from the drop in Yung Chi'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 |
| Yung Chi vs. China Steel Chemical | Yung Chi vs. Taiwan Secom Co | Yung Chi vs. Standard Foods Corp | Yung Chi vs. Eternal Materials 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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