Correlation Between Wisher Industrial and Tainan Enterprises
Can any of the company-specific risk be diversified away by investing in both Wisher Industrial and Tainan Enterprises 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 Wisher Industrial and Tainan Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wisher Industrial Co and Tainan Enterprises Co, you can compare the effects of market volatilities on Wisher Industrial and Tainan Enterprises 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 Wisher Industrial with a short position of Tainan Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisher Industrial and Tainan Enterprises.
Diversification Opportunities for Wisher Industrial and Tainan Enterprises
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wisher and Tainan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wisher Industrial Co and Tainan Enterprises Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainan Enterprises and Wisher Industrial 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 Wisher Industrial Co are associated (or correlated) with Tainan Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainan Enterprises has no effect on the direction of Wisher Industrial i.e., Wisher Industrial and Tainan Enterprises go up and down completely randomly.
Pair Corralation between Wisher Industrial and Tainan Enterprises
Assuming the 90 days trading horizon Wisher Industrial is expected to generate 8.43 times less return on investment than Tainan Enterprises. But when comparing it to its historical volatility, Wisher Industrial Co is 2.33 times less risky than Tainan Enterprises. It trades about 0.02 of its potential returns per unit of risk. Tainan Enterprises Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,370 in Tainan Enterprises Co on November 27, 2024 and sell it today you would earn a total of 1,370 from holding Tainan Enterprises Co or generate 57.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Wisher Industrial Co vs. Tainan Enterprises Co
Performance |
| Timeline |
| Wisher Industrial |
| Tainan Enterprises |
Wisher Industrial and Tainan Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wisher Industrial and Tainan Enterprises
The main advantage of trading using opposite Wisher Industrial and Tainan Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wisher Industrial position performs unexpectedly, Tainan Enterprises 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 Tainan Enterprises will offset losses from the drop in Tainan Enterprises' long position.| Wisher Industrial vs. De Licacy Industrial | Wisher Industrial vs. Nien Hsing Textile | Wisher Industrial vs. Tainan Enterprises Co | Wisher Industrial vs. Tex Ray Industrial Co |
| Tainan Enterprises vs. Nien Hsing Textile | Tainan Enterprises vs. De Licacy Industrial | Tainan Enterprises vs. Kaulin Mfg | Tainan Enterprises vs. Tex Ray Industrial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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