Correlation Between Tainan Spinning and Shan Loong
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Shan Loong 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 Shan Loong 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 Shan Loong Transportation Co, you can compare the effects of market volatilities on Tainan Spinning and Shan Loong 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 Shan Loong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Shan Loong.
Diversification Opportunities for Tainan Spinning and Shan Loong
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tainan and Shan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Shan Loong Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shan Loong Transport 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 Shan Loong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shan Loong Transport has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Shan Loong go up and down completely randomly.
Pair Corralation between Tainan Spinning and Shan Loong
Assuming the 90 days trading horizon Tainan Spinning Co is expected to generate 1.81 times more return on investment than Shan Loong. However, Tainan Spinning is 1.81 times more volatile than Shan Loong Transportation Co. It trades about -0.01 of its potential returns per unit of risk. Shan Loong Transportation Co is currently generating about -0.1 per unit of risk. If you would invest 1,720 in Tainan Spinning Co on September 3, 2024 and sell it today you would lose (200.00) from holding Tainan Spinning Co or give up 11.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tainan Spinning Co vs. Shan Loong Transportation Co
Performance |
| Timeline |
| Tainan Spinning |
| Shan Loong Transport |
Tainan Spinning and Shan Loong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Shan Loong
The main advantage of trading using opposite Tainan Spinning and Shan Loong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Shan Loong 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 Shan Loong will offset losses from the drop in Shan Loong'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 |
| Shan Loong vs. Tainan Spinning Co | Shan Loong vs. Chia Her Industrial | Shan Loong vs. WiseChip Semiconductor | Shan Loong 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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