Correlation Between Grape King and Taisun Enterprise
Can any of the company-specific risk be diversified away by investing in both Grape King and Taisun Enterprise 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 Grape King and Taisun Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grape King Bio and Taisun Enterprise Co, you can compare the effects of market volatilities on Grape King and Taisun Enterprise 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 Grape King with a short position of Taisun Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grape King and Taisun Enterprise.
Diversification Opportunities for Grape King and Taisun Enterprise
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grape and Taisun is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Grape King Bio and Taisun Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taisun Enterprise and Grape King 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 Grape King Bio are associated (or correlated) with Taisun Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taisun Enterprise has no effect on the direction of Grape King i.e., Grape King and Taisun Enterprise go up and down completely randomly.
Pair Corralation between Grape King and Taisun Enterprise
Assuming the 90 days trading horizon Grape King is expected to generate 2.44 times less return on investment than Taisun Enterprise. But when comparing it to its historical volatility, Grape King Bio is 1.03 times less risky than Taisun Enterprise. It trades about 0.1 of its potential returns per unit of risk. Taisun Enterprise Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,940 in Taisun Enterprise Co on November 29, 2024 and sell it today you would earn a total of 70.00 from holding Taisun Enterprise Co or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Grape King Bio vs. Taisun Enterprise Co
Performance |
| Timeline |
| Grape King Bio |
| Taisun Enterprise |
Grape King and Taisun Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grape King and Taisun Enterprise
The main advantage of trading using opposite Grape King and Taisun Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grape King position performs unexpectedly, Taisun Enterprise 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 Taisun Enterprise will offset losses from the drop in Taisun Enterprise's long position.| Grape King vs. Standard Foods Corp | Grape King vs. Eclat Textile Co | Grape King vs. Feng Tay Enterprises | Grape King vs. China Steel Chemical |
| Taisun Enterprise vs. AGV Products Corp | Taisun Enterprise vs. Wei Chuan Foods | Taisun Enterprise vs. Chia Hsin Cement | Taisun Enterprise vs. Grand Pacific Petrochemical |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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