Correlation Between Tainan Enterprises and Shin Tai
Can any of the company-specific risk be diversified away by investing in both Tainan Enterprises and Shin Tai 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 Shin Tai 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 Shin Tai Industry, you can compare the effects of market volatilities on Tainan Enterprises and Shin Tai 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 Shin Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Enterprises and Shin Tai.
Diversification Opportunities for Tainan Enterprises and Shin Tai
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tainan and Shin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Enterprises Co and Shin Tai Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Tai Industry 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 Shin Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Tai Industry has no effect on the direction of Tainan Enterprises i.e., Tainan Enterprises and Shin Tai go up and down completely randomly.
Pair Corralation between Tainan Enterprises and Shin Tai
Assuming the 90 days trading horizon Tainan Enterprises Co is expected to generate 0.57 times more return on investment than Shin Tai. However, Tainan Enterprises Co is 1.74 times less risky than Shin Tai. It trades about -0.16 of its potential returns per unit of risk. Shin Tai Industry is currently generating about -0.15 per unit of risk. If you would invest 3,685 in Tainan Enterprises Co on August 31, 2024 and sell it today you would lose (135.00) from holding Tainan Enterprises Co or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tainan Enterprises Co vs. Shin Tai Industry
Performance |
| Timeline |
| Tainan Enterprises |
| Shin Tai Industry |
Tainan Enterprises and Shin Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Enterprises and Shin Tai
The main advantage of trading using opposite Tainan Enterprises and Shin Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Enterprises position performs unexpectedly, Shin Tai 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 Shin Tai will offset losses from the drop in Shin Tai'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 |
| Shin Tai vs. Taisun Enterprise Co | Shin Tai vs. De Licacy Industrial | Shin Tai vs. Wisher Industrial Co | Shin Tai vs. Tainan Enterprises 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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