Correlation Between Tainan Spinning and E Lead
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and E Lead 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 E Lead 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 E Lead Electronic Co, you can compare the effects of market volatilities on Tainan Spinning and E Lead 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 E Lead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and E Lead.
Diversification Opportunities for Tainan Spinning and E Lead
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tainan and 2497 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and E Lead Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Lead Electronic 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 E Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Lead Electronic has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and E Lead go up and down completely randomly.
Pair Corralation between Tainan Spinning and E Lead
Assuming the 90 days trading horizon Tainan Spinning Co is expected to generate 0.66 times more return on investment than E Lead. However, Tainan Spinning Co is 1.52 times less risky than E Lead. It trades about -0.01 of its potential returns per unit of risk. E Lead Electronic Co is currently generating about -0.01 per unit of risk. If you would invest 1,730 in Tainan Spinning Co on September 4, 2024 and sell it today you would lose (215.00) from holding Tainan Spinning Co or give up 12.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. E Lead Electronic Co
Performance |
| Timeline |
| Tainan Spinning |
| E Lead Electronic |
Tainan Spinning and E Lead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and E Lead
The main advantage of trading using opposite Tainan Spinning and E Lead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, E Lead 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 E Lead will offset losses from the drop in E Lead'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 |
| E Lead vs. Weltrend Semiconductor | E Lead vs. Catcher Technology Co | E Lead vs. Cub Elecparts | E Lead vs. Elan 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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