Correlation Between Tainan Spinning and Taiwan Hon
Can any of the company-specific risk be diversified away by investing in both Tainan Spinning and Taiwan Hon 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 Taiwan Hon 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 Taiwan Hon Chuan, you can compare the effects of market volatilities on Tainan Spinning and Taiwan Hon 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 Taiwan Hon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Spinning and Taiwan Hon.
Diversification Opportunities for Tainan Spinning and Taiwan Hon
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tainan and Taiwan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Spinning Co and Taiwan Hon Chuan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Hon Chuan 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 Taiwan Hon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Hon Chuan has no effect on the direction of Tainan Spinning i.e., Tainan Spinning and Taiwan Hon go up and down completely randomly.
Pair Corralation between Tainan Spinning and Taiwan Hon
Assuming the 90 days trading horizon Tainan Spinning Co is expected to generate 0.59 times more return on investment than Taiwan Hon. However, Tainan Spinning Co is 1.68 times less risky than Taiwan Hon. It trades about 0.0 of its potential returns per unit of risk. Taiwan Hon Chuan is currently generating about -0.17 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Spinning Co vs. Taiwan Hon Chuan
Performance |
| Timeline |
| Tainan Spinning |
| Taiwan Hon Chuan |
Tainan Spinning and Taiwan Hon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Spinning and Taiwan Hon
The main advantage of trading using opposite Tainan Spinning and Taiwan Hon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Spinning position performs unexpectedly, Taiwan Hon 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 Taiwan Hon will offset losses from the drop in Taiwan Hon'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 |
| Taiwan Hon vs. China Mobile | Taiwan Hon vs. TWOWAY Communications | Taiwan Hon vs. X Legend Entertainment Co | Taiwan Hon vs. Gamania Digital Entertainment |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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