Correlation Between Tainan Enterprises and Great Wall
Can any of the company-specific risk be diversified away by investing in both Tainan Enterprises and Great Wall 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 Enterprises and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tainan Enterprises Co and Great Wall Enterprise, you can compare the effects of market volatilities on Tainan Enterprises and Great Wall 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 Enterprises with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Enterprises and Great Wall.
Diversification Opportunities for Tainan Enterprises and Great Wall
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tainan and Great is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Enterprises Co and Great Wall Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Enterprise and Tainan Enterprises 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 Enterprises Co are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Enterprise has no effect on the direction of Tainan Enterprises i.e., Tainan Enterprises and Great Wall go up and down completely randomly.
Pair Corralation between Tainan Enterprises and Great Wall
Assuming the 90 days trading horizon Tainan Enterprises Co is expected to generate 1.45 times more return on investment than Great Wall. However, Tainan Enterprises is 1.45 times more volatile than Great Wall Enterprise. It trades about 0.47 of its potential returns per unit of risk. Great Wall Enterprise is currently generating about 0.37 per unit of risk. If you would invest 3,440 in Tainan Enterprises Co on December 1, 2024 and sell it today you would earn a total of 350.00 from holding Tainan Enterprises Co or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Enterprises Co vs. Great Wall Enterprise
Performance |
| Timeline |
| Tainan Enterprises |
| Great Wall Enterprise |
Tainan Enterprises and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Enterprises and Great Wall
The main advantage of trading using opposite Tainan Enterprises and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Enterprises position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.| Tainan Enterprises vs. Nien Hsing Textile | Tainan Enterprises vs. De Licacy Industrial | Tainan Enterprises vs. Kaulin Mfg | Tainan Enterprises vs. Tex Ray Industrial Co |
| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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