Correlation Between Tainan Enterprises and Nien Hsing
Can any of the company-specific risk be diversified away by investing in both Tainan Enterprises and Nien Hsing 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 Nien Hsing 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 Nien Hsing Textile, you can compare the effects of market volatilities on Tainan Enterprises and Nien Hsing 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 Nien Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tainan Enterprises and Nien Hsing.
Diversification Opportunities for Tainan Enterprises and Nien Hsing
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tainan and Nien is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tainan Enterprises Co and Nien Hsing Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Hsing Textile 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 Nien Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Hsing Textile has no effect on the direction of Tainan Enterprises i.e., Tainan Enterprises and Nien Hsing go up and down completely randomly.
Pair Corralation between Tainan Enterprises and Nien Hsing
Assuming the 90 days trading horizon Tainan Enterprises Co is expected to under-perform the Nien Hsing. In addition to that, Tainan Enterprises is 1.03 times more volatile than Nien Hsing Textile. It trades about -0.16 of its total potential returns per unit of risk. Nien Hsing Textile is currently generating about 0.2 per unit of volatility. If you would invest 1,995 in Nien Hsing Textile on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Nien Hsing Textile or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tainan Enterprises Co vs. Nien Hsing Textile
Performance |
| Timeline |
| Tainan Enterprises |
| Nien Hsing Textile |
Tainan Enterprises and Nien Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tainan Enterprises and Nien Hsing
The main advantage of trading using opposite Tainan Enterprises and Nien Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tainan Enterprises position performs unexpectedly, Nien Hsing 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 Nien Hsing will offset losses from the drop in Nien Hsing's long position.| Tainan Enterprises vs. Chaintech Technology Corp | Tainan Enterprises vs. AVerMedia Technologies | Tainan Enterprises vs. Avision | Tainan Enterprises vs. Clevo Co |
| Nien Hsing vs. Tainan Enterprises Co | Nien Hsing vs. De Licacy Industrial | Nien Hsing vs. Taiwan Styrene Monomer | Nien Hsing vs. Kaulin Mfg |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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