Correlation Between Tainan Spinning and Merida Industry
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Merida Industry 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 Merida Industry 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 Merida Industry Co, you can compare the effects of market volatilities on Tainan Spinning and Merida Industry 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 Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Merida Industry.
Diversification Opportunities for Tainan Spinning and Merida Industry
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tainan and Merida is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry 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 Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Merida Industry go up and down completely randomly.
Pair Corralation between Tainan Spinning and Merida Industry
Assuming the 90 days trading horizon Tainan Spinning Co is expected to generate 0.43 times more return on investment than Merida Industry. However, Tainan Spinning Co is 2.33 times less risky than Merida Industry. It trades about 0.0 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.03 per unit of risk. If you would invest 1,510 in Tainan Spinning Co on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Tainan Spinning Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. Merida Industry Co
Performance |
| Timeline |
| Tainan Spinning |
| Merida Industry |
Tainan Spinning and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Merida Industry
The main advantage of trading using opposite Tainan Spinning and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Merida Industry 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 Merida Industry will offset losses from the drop in Merida Industry'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 |
| Merida Industry vs. Giant Manufacturing Co | Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Feng Tay Enterprises | Merida Industry vs. President Chain Store |
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 CEOs Directory module to screen CEOs from public companies around the world.
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