Correlation Between Ta Ya and Taiwan Sanyo
Can any of the company-specific risk be diversified away by investing in both Ta Ya and Taiwan Sanyo 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 Taiwan Sanyo 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 Taiwan Sanyo Electric, you can compare the effects of market volatilities on Ta Ya and Taiwan Sanyo 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 Taiwan Sanyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Ya and Taiwan Sanyo.
Diversification Opportunities for Ta Ya and Taiwan Sanyo
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1609 and Taiwan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ta Ya Electric and Taiwan Sanyo Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Sanyo Electric 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 Taiwan Sanyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Sanyo Electric has no effect on the direction of Ta Ya i.e., Ta Ya and Taiwan Sanyo go up and down completely randomly.
Pair Corralation between Ta Ya and Taiwan Sanyo
Assuming the 90 days trading horizon Ta Ya Electric is expected to under-perform the Taiwan Sanyo. In addition to that, Ta Ya is 2.31 times more volatile than Taiwan Sanyo Electric. It trades about -0.1 of its total potential returns per unit of risk. Taiwan Sanyo Electric is currently generating about -0.06 per unit of volatility. If you would invest 4,150 in Taiwan Sanyo Electric on October 25, 2024 and sell it today you would lose (280.00) from holding Taiwan Sanyo Electric or give up 6.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ta Ya Electric vs. Taiwan Sanyo Electric
Performance |
| Timeline |
| Ta Ya Electric |
| Taiwan Sanyo Electric |
Ta Ya and Taiwan Sanyo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Ya and Taiwan Sanyo
The main advantage of trading using opposite Ta Ya and Taiwan Sanyo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Ya position performs unexpectedly, Taiwan Sanyo 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 Sanyo will offset losses from the drop in Taiwan Sanyo'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 |
| Taiwan Sanyo vs. Sampo Corp | Taiwan Sanyo vs. China Electric Manufacturing | Taiwan Sanyo vs. Walsin Lihwa Corp | Taiwan Sanyo vs. Ta Ya Electric |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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