Correlation Between Taiwan Taffeta and Tah Tong
Can any of the company-specific risk be diversified away by investing in both Taiwan Taffeta and Tah Tong 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 Taiwan Taffeta and Tah Tong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Taffeta Fabric and Tah Tong Textile, you can compare the effects of market volatilities on Taiwan Taffeta and Tah Tong 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 Taiwan Taffeta with a short position of Tah Tong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Taffeta and Tah Tong.
Diversification Opportunities for Taiwan Taffeta and Tah Tong
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Taiwan and Tah is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Taffeta Fabric and Tah Tong Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tah Tong Textile and Taiwan Taffeta 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 Taiwan Taffeta Fabric are associated (or correlated) with Tah Tong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tah Tong Textile has no effect on the direction of Taiwan Taffeta i.e., Taiwan Taffeta and Tah Tong go up and down completely randomly.
Pair Corralation between Taiwan Taffeta and Tah Tong
Assuming the 90 days trading horizon Taiwan Taffeta Fabric is expected to generate 1.96 times more return on investment than Tah Tong. However, Taiwan Taffeta is 1.96 times more volatile than Tah Tong Textile. It trades about -0.01 of its potential returns per unit of risk. Tah Tong Textile is currently generating about -0.11 per unit of risk. If you would invest 1,530 in Taiwan Taffeta Fabric on October 20, 2024 and sell it today you would lose (25.00) from holding Taiwan Taffeta Fabric or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Taffeta Fabric vs. Tah Tong Textile
Performance |
| Timeline |
| Taiwan Taffeta Fabric |
| Tah Tong Textile |
Taiwan Taffeta and Tah Tong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Taffeta and Tah Tong
The main advantage of trading using opposite Taiwan Taffeta and Tah Tong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Taffeta position performs unexpectedly, Tah Tong 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 Tah Tong will offset losses from the drop in Tah Tong's long position.| Taiwan Taffeta vs. Carnival Industrial Corp | Taiwan Taffeta vs. De Licacy Industrial | Taiwan Taffeta vs. Tex Ray Industrial Co | Taiwan Taffeta vs. Reward Wool Industry |
| Tah Tong vs. Carnival Industrial Corp | Tah Tong vs. De Licacy Industrial | Tah Tong vs. Tex Ray Industrial Co | Tah Tong vs. Reward Wool Industry |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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