Correlation Between Ta Yih and Taiwan Sakura
Can any of the company-specific risk be diversified away by investing in both Ta Yih and Taiwan Sakura 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 Ta Yih and Taiwan Sakura into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Yih Industrial and Taiwan Sakura Corp, you can compare the effects of market volatilities on Ta Yih and Taiwan Sakura 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 Ta Yih with a short position of Taiwan Sakura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Yih and Taiwan Sakura.
Diversification Opportunities for Ta Yih and Taiwan Sakura
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 1521 and Taiwan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ta Yih Industrial and Taiwan Sakura Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sakura Corp and Ta Yih 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 Ta Yih Industrial are associated (or correlated) with Taiwan Sakura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sakura Corp has no effect on the direction of Ta Yih i.e., Ta Yih and Taiwan Sakura go up and down completely randomly.
Pair Corralation between Ta Yih and Taiwan Sakura
Assuming the 90 days trading horizon Ta Yih Industrial is expected to under-perform the Taiwan Sakura. In addition to that, Ta Yih is 4.77 times more volatile than Taiwan Sakura Corp. It trades about -0.23 of its total potential returns per unit of risk. Taiwan Sakura Corp is currently generating about -0.08 per unit of volatility. If you would invest 8,450 in Taiwan Sakura Corp on November 8, 2024 and sell it today you would lose (50.00) from holding Taiwan Sakura Corp or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ta Yih Industrial vs. Taiwan Sakura Corp
Performance |
| Timeline |
| Ta Yih Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Taiwan Sakura Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Ta Yih and Taiwan Sakura Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Yih and Taiwan Sakura
The main advantage of trading using opposite Ta Yih and Taiwan Sakura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Yih position performs unexpectedly, Taiwan Sakura 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 Sakura will offset losses from the drop in Taiwan Sakura's long position.The idea behind Ta Yih Industrial and Taiwan Sakura Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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