Correlation Between Ta Ya and China Electric
Can any of the company-specific risk be diversified away by investing in both Ta Ya and China Electric 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 Ya and China Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Ya Electric and China Electric Manufacturing, you can compare the effects of market volatilities on Ta Ya and China Electric 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 Ya with a short position of China Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Ya and China Electric.
Diversification Opportunities for Ta Ya and China Electric
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 1609 and China is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ta Ya Electric and China Electric Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Electric Manuf and Ta Ya 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 Ya Electric are associated (or correlated) with China Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Electric Manuf has no effect on the direction of Ta Ya i.e., Ta Ya and China Electric go up and down completely randomly.
Pair Corralation between Ta Ya and China Electric
Assuming the 90 days trading horizon Ta Ya Electric is expected to under-perform the China Electric. But the stock apears to be less risky and, when comparing its historical volatility, Ta Ya Electric is 1.26 times less risky than China Electric. The stock trades about -0.12 of its potential returns per unit of risk. The China Electric Manufacturing is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,685 in China Electric Manufacturing on October 26, 2024 and sell it today you would lose (190.00) from holding China Electric Manufacturing or give up 11.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ta Ya Electric vs. China Electric Manufacturing
Performance |
| Timeline |
| Ta Ya Electric |
| China Electric Manuf |
Ta Ya and China Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Ya and China Electric
The main advantage of trading using opposite Ta Ya and China Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Ya position performs unexpectedly, China Electric 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 China Electric will offset losses from the drop in China Electric's long position.| Ta Ya vs. Walsin Lihwa Corp | Ta Ya vs. Hua Eng Wire | Ta Ya vs. Hong Tai Electric | Ta Ya vs. Chung Hsin Electric Machinery |
| China Electric vs. Hold Key Electric Wire | China Electric vs. Anderson Industrial Corp | China Electric vs. Carnival Industrial Corp | China Electric vs. Lee Chi Enterprises |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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