Correlation Between Chung Hsin and Taishin Financial
Can any of the company-specific risk be diversified away by investing in both Chung Hsin and Taishin Financial 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 Chung Hsin and Taishin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Hsin Electric Machinery and Taishin Financial Holding, you can compare the effects of market volatilities on Chung Hsin and Taishin Financial 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 Chung Hsin with a short position of Taishin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Hsin and Taishin Financial.
Diversification Opportunities for Chung Hsin and Taishin Financial
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chung and Taishin is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chung Hsin Electric Machinery and Taishin Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taishin Financial Holding and Chung Hsin 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 Chung Hsin Electric Machinery are associated (or correlated) with Taishin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taishin Financial Holding has no effect on the direction of Chung Hsin i.e., Chung Hsin and Taishin Financial go up and down completely randomly.
Pair Corralation between Chung Hsin and Taishin Financial
Assuming the 90 days trading horizon Chung Hsin Electric Machinery is expected to generate 6.08 times more return on investment than Taishin Financial. However, Chung Hsin is 6.08 times more volatile than Taishin Financial Holding. It trades about 0.0 of its potential returns per unit of risk. Taishin Financial Holding is currently generating about -0.03 per unit of risk. If you would invest 16,650 in Chung Hsin Electric Machinery on September 1, 2024 and sell it today you would lose (850.00) from holding Chung Hsin Electric Machinery or give up 5.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Hsin Electric Machinery vs. Taishin Financial Holding
Performance |
| Timeline |
| Chung Hsin Electric |
| Taishin Financial Holding |
Chung Hsin and Taishin Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Hsin and Taishin Financial
The main advantage of trading using opposite Chung Hsin and Taishin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Hsin position performs unexpectedly, Taishin Financial 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 Taishin Financial will offset losses from the drop in Taishin Financial's long position.| Chung Hsin vs. BES Engineering Co | Chung Hsin vs. Continental Holdings Corp | Chung Hsin vs. Kee Tai Properties | Chung Hsin vs. Hung Sheng Construction |
| Taishin Financial vs. Mega Financial Holding | Taishin Financial vs. Taiwan Cooperative Financial | Taishin Financial vs. ESUN Financial Holding | Taishin Financial vs. First Financial Holding |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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