Correlation Between Tainan Spinning and King Chou
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and King Chou 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 King Chou 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 King Chou Marine, you can compare the effects of market volatilities on Tainan Spinning and King Chou 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 King Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and King Chou.
Diversification Opportunities for Tainan Spinning and King Chou
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tainan and King is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and King Chou Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Chou Marine 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 King Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Chou Marine has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and King Chou go up and down completely randomly.
Pair Corralation between Tainan Spinning and King Chou
Assuming the 90 days trading horizon Tainan Spinning is expected to generate 77.46 times less return on investment than King Chou. But when comparing it to its historical volatility, Tainan Spinning Co is 1.37 times less risky than King Chou. It trades about 0.0 of its potential returns per unit of risk. King Chou Marine is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,005 in King Chou Marine on September 13, 2024 and sell it today you would earn a total of 185.00 from holding King Chou Marine or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. King Chou Marine
Performance |
| Timeline |
| Tainan Spinning |
| King Chou Marine |
Tainan Spinning and King Chou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and King Chou
The main advantage of trading using opposite Tainan Spinning and King Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, King Chou 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 King Chou will offset losses from the drop in King Chou's long position.| Tainan Spinning vs. Lealea Enterprise Co | Tainan Spinning vs. China Petrochemical Development | Tainan Spinning vs. Oriental Union Chemical | Tainan Spinning vs. UPC Technology Corp |
| King Chou vs. Dadi Early Childhood Education | King Chou vs. Weltrend Semiconductor | King Chou vs. Min Aik Technology | King Chou vs. Vate Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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