Correlation Between Grape King and Taiwan Secom
Can any of the company-specific risk be diversified away by investing in both Grape King and Taiwan Secom 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 Taiwan Secom 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 Taiwan Secom Co, you can compare the effects of market volatilities on Grape King and Taiwan Secom 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 Taiwan Secom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grape King and Taiwan Secom.
Diversification Opportunities for Grape King and Taiwan Secom
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grape and Taiwan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Grape King Bio and Taiwan Secom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Secom 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 Taiwan Secom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Secom has no effect on the direction of Grape King i.e., Grape King and Taiwan Secom go up and down completely randomly.
Pair Corralation between Grape King and Taiwan Secom
Assuming the 90 days trading horizon Grape King Bio is expected to under-perform the Taiwan Secom. But the stock apears to be less risky and, when comparing its historical volatility, Grape King Bio is 1.16 times less risky than Taiwan Secom. The stock trades about -0.02 of its potential returns per unit of risk. The Taiwan Secom Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 11,600 in Taiwan Secom Co on August 31, 2024 and sell it today you would earn a total of 1,250 from holding Taiwan Secom Co or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grape King Bio vs. Taiwan Secom Co
Performance |
| Timeline |
| Grape King Bio |
| Taiwan Secom |
Grape King and Taiwan Secom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grape King and Taiwan Secom
The main advantage of trading using opposite Grape King and Taiwan Secom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grape King position performs unexpectedly, Taiwan Secom 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 Secom will offset losses from the drop in Taiwan Secom's long position.| Grape King vs. Taisun Enterprise Co | Grape King vs. De Licacy Industrial | Grape King vs. Wisher Industrial Co | Grape King vs. Tainan Enterprises Co |
| Taiwan Secom vs. Taiwan Shin Kong | Taiwan Secom vs. President Chain Store | Taiwan Secom vs. Yulon Finance Corp | Taiwan Secom vs. Giant Manufacturing Co |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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