Correlation Between Tainan Spinning and Yulon Nissan
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Yulon Nissan 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 Yulon Nissan 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 Yulon Nissan Motor, you can compare the effects of market volatilities on Tainan Spinning and Yulon Nissan 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 Yulon Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Yulon Nissan.
Diversification Opportunities for Tainan Spinning and Yulon Nissan
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tainan and Yulon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Yulon Nissan Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Nissan Motor 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 Yulon Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Nissan Motor has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Yulon Nissan go up and down completely randomly.
Pair Corralation between Tainan Spinning and Yulon Nissan
Assuming the 90 days trading horizon Tainan Spinning Co is expected to generate 0.88 times more return on investment than Yulon Nissan. However, Tainan Spinning Co is 1.14 times less risky than Yulon Nissan. It trades about -0.08 of its potential returns per unit of risk. Yulon Nissan Motor is currently generating about -0.17 per unit of risk. If you would invest 1,825 in Tainan Spinning Co on September 3, 2024 and sell it today you would lose (305.00) from holding Tainan Spinning Co or give up 16.71% 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. Yulon Nissan Motor
Performance |
| Timeline |
| Tainan Spinning |
| Yulon Nissan Motor |
Tainan Spinning and Yulon Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Yulon Nissan
The main advantage of trading using opposite Tainan Spinning and Yulon Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Yulon Nissan 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 Yulon Nissan will offset losses from the drop in Yulon Nissan'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 |
| Yulon Nissan vs. Tainan Spinning Co | Yulon Nissan vs. Chia Her Industrial | Yulon Nissan vs. WiseChip Semiconductor | Yulon Nissan vs. Novatek Microelectronics Corp |
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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