Correlation Between Eclat Textile and Taiwan Paiho
Can any of the company-specific risk be diversified away by investing in both Eclat Textile and Taiwan Paiho 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 Eclat Textile and Taiwan Paiho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eclat Textile Co and Taiwan Paiho, you can compare the effects of market volatilities on Eclat Textile and Taiwan Paiho 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 Eclat Textile with a short position of Taiwan Paiho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eclat Textile and Taiwan Paiho.
Diversification Opportunities for Eclat Textile and Taiwan Paiho
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eclat and Taiwan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Eclat Textile Co and Taiwan Paiho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Paiho and Eclat Textile 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 Eclat Textile Co are associated (or correlated) with Taiwan Paiho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Paiho has no effect on the direction of Eclat Textile i.e., Eclat Textile and Taiwan Paiho go up and down completely randomly.
Pair Corralation between Eclat Textile and Taiwan Paiho
Assuming the 90 days trading horizon Eclat Textile is expected to generate 7.76 times less return on investment than Taiwan Paiho. But when comparing it to its historical volatility, Eclat Textile Co is 1.42 times less risky than Taiwan Paiho. It trades about 0.03 of its potential returns per unit of risk. Taiwan Paiho is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,090 in Taiwan Paiho on August 28, 2024 and sell it today you would earn a total of 1,910 from holding Taiwan Paiho or generate 31.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eclat Textile Co vs. Taiwan Paiho
Performance |
| Timeline |
| Eclat Textile |
| Taiwan Paiho |
Eclat Textile and Taiwan Paiho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eclat Textile and Taiwan Paiho
The main advantage of trading using opposite Eclat Textile and Taiwan Paiho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eclat Textile position performs unexpectedly, Taiwan Paiho 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 Taiwan Paiho will offset losses from the drop in Taiwan Paiho's long position.| Eclat Textile vs. Taiwan Semiconductor Manufacturing | Eclat Textile vs. Hon Hai Precision | Eclat Textile vs. MediaTek | Eclat Textile vs. Chunghwa Telecom Co |
| Taiwan Paiho vs. Taiwan Semiconductor Manufacturing | Taiwan Paiho vs. Hon Hai Precision | Taiwan Paiho vs. MediaTek | Taiwan Paiho vs. Chunghwa Telecom 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 CEOs Directory module to screen CEOs from public companies around the world.
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