Correlation Between Taiwan Fertilizer and Standard Foods
Can any of the company-specific risk be diversified away by investing in both Taiwan Fertilizer and Standard Foods 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 Taiwan Fertilizer and Standard Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Fertilizer Co and Standard Foods Corp, you can compare the effects of market volatilities on Taiwan Fertilizer and Standard Foods 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 Taiwan Fertilizer with a short position of Standard Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Fertilizer and Standard Foods.
Diversification Opportunities for Taiwan Fertilizer and Standard Foods
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Taiwan and Standard is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Fertilizer Co and Standard Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Foods Corp and Taiwan Fertilizer 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 Taiwan Fertilizer Co are associated (or correlated) with Standard Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Foods Corp has no effect on the direction of Taiwan Fertilizer i.e., Taiwan Fertilizer and Standard Foods go up and down completely randomly.
Pair Corralation between Taiwan Fertilizer and Standard Foods
Assuming the 90 days trading horizon Taiwan Fertilizer Co is expected to generate 1.21 times more return on investment than Standard Foods. However, Taiwan Fertilizer is 1.21 times more volatile than Standard Foods Corp. It trades about 0.0 of its potential returns per unit of risk. Standard Foods Corp is currently generating about -0.02 per unit of risk. If you would invest 5,620 in Taiwan Fertilizer Co on September 1, 2024 and sell it today you would lose (30.00) from holding Taiwan Fertilizer Co or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Taiwan Fertilizer Co vs. Standard Foods Corp
Performance |
| Timeline |
| Taiwan Fertilizer |
| Standard Foods Corp |
Taiwan Fertilizer and Standard Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taiwan Fertilizer and Standard Foods
The main advantage of trading using opposite Taiwan Fertilizer and Standard Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Fertilizer position performs unexpectedly, Standard Foods 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 Standard Foods will offset losses from the drop in Standard Foods' long position.| Taiwan Fertilizer vs. Taiwan Cement Corp | Taiwan Fertilizer vs. Far Eastern New | Taiwan Fertilizer vs. Asia Cement Corp | Taiwan Fertilizer vs. Formosa Plastics Corp |
| Standard Foods vs. De Licacy Industrial | Standard Foods vs. Wisher Industrial Co | Standard Foods vs. Tainan Enterprises 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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