Correlation Between Chi Hua and Taiwan Semiconductor
Can any of the company-specific risk be diversified away by investing in both Chi Hua and Taiwan Semiconductor 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 Chi Hua and Taiwan Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chi Hua Fitness and Taiwan Semiconductor Co, you can compare the effects of market volatilities on Chi Hua and Taiwan Semiconductor 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 Chi Hua with a short position of Taiwan Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chi Hua and Taiwan Semiconductor.
Diversification Opportunities for Chi Hua and Taiwan Semiconductor
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chi and Taiwan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chi Hua Fitness and Taiwan Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Semiconductor and Chi Hua 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 Chi Hua Fitness are associated (or correlated) with Taiwan Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Semiconductor has no effect on the direction of Chi Hua i.e., Chi Hua and Taiwan Semiconductor go up and down completely randomly.
Pair Corralation between Chi Hua and Taiwan Semiconductor
Assuming the 90 days trading horizon Chi Hua Fitness is expected to generate 0.66 times more return on investment than Taiwan Semiconductor. However, Chi Hua Fitness is 1.52 times less risky than Taiwan Semiconductor. It trades about -0.18 of its potential returns per unit of risk. Taiwan Semiconductor Co is currently generating about -0.22 per unit of risk. If you would invest 3,880 in Chi Hua Fitness on October 24, 2024 and sell it today you would lose (430.00) from holding Chi Hua Fitness or give up 11.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chi Hua Fitness vs. Taiwan Semiconductor Co
Performance |
| Timeline |
| Chi Hua Fitness |
| Taiwan Semiconductor |
Chi Hua and Taiwan Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chi Hua and Taiwan Semiconductor
The main advantage of trading using opposite Chi Hua and Taiwan Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chi Hua position performs unexpectedly, Taiwan Semiconductor 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 Semiconductor will offset losses from the drop in Taiwan Semiconductor's long position.| Chi Hua vs. HOYA Resort Hotel | Chi Hua vs. Compal Broadband Networks | Chi Hua vs. Ambassador Hotel | Chi Hua vs. Hotel Holiday Garden |
| Taiwan Semiconductor vs. WinMate Communication INC | Taiwan Semiconductor vs. Apex Biotechnology Corp | Taiwan Semiconductor vs. Cowealth Medical Holding | Taiwan Semiconductor vs. Easywell Biomedicals |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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